Private equity in Africa has underwhelmed compared to the expectations of the early to mid-2010s. Many funds raised in the last decade have struggled to find exits, and when exits materialise, returns disappoint in USD terms. Without being reductive, much of this underperformance traces back to exchange rate trends across Africa over the past decade. The continent's major economies have suffered historic currency depreciations, creating severe knock-on effects throughout the PE industry. These depreciations have dissuaded commercial LPs from backing African funds, pressured portfolio company balance sheets, and wiped out returns when translated from local currency to USD. In this light, the industry is at a critical juncture, as a more positive exchange rate outlook across the continent could provide the platform needed to catalyse fundraising and improve performance.
Quantifying the scale of currency depreciation in Africa
It is hard to overstate the scale of Africa's currency depreciation. Using the Stears Africa FX monitor to track seven floating
