Opinion

Blended Finance: A tool for driving PE investment in Africa

Word count: 670

The 2017 African Economic Outlook predicts that Africa’s average growth is expected to reach 4.3% in 2018. The private equity (PE) and venture capital industry in Africa continues to witness strong performance across diverse sectors. Returns to investors are expected to remain strong with considerable growth in robust asset classes such as infrastructure, which provides stable, long-term cash flows. Despite the prevalence of lucrative deals, investors in Africa face high transaction costs stemming from unique risk factors, such as exposure to market volatility, as well as political and credit risk. The insurance and credit enhancement products required to offset these risks lead to higher transaction costs.