Setting the right benchmarks for African private equity funds

The global private equity (PE) market has shown remarkable resilience, delivering strong returns through crises like the 2008 financial crisis and the COVID-19 pandemic. In 2024, the asset class returned 7.3%, improving on 2023 but trailing public equity markets, where the S&P 500 surged 25% and the Russell 2500 gained 12%. 

 


African private equity, in contrast, has delivered more modest returns. Over the past decade, net IRRs have hovered around 9%–10%, on par with Latin America but below Europe (14%–16%), Asia (11%–12%), and North America, as structural constraints ranging from currency volatility to high financing costs have weighed on investment returns.

 

Plus, almost half of Africa-focused PE funds fall within the 10% USD net IRR range, with only a small fraction (~5%) generating returns above 30%.Despite the growth of alternative investments, scrutiny persists over how performance is measured, particularly the reliance on Internal Rate of Return (IRR). IRR tends to

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Stears Research

Stears Research

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