African private equity funds will struggle in fundraising through 2009 as investors have withdrawn from the market, says Rod Evison, a managing director at UK government-backed, emerging markets-focused firm CDC.
Despite escaping the direct effects of the financial crisis, secondary effects, such as falling commodity prices, may result in declining economic activity in 2009 in African countries like South Africa and Nigeria, according to a statement.
Evison predicts that African funds launched in the second half of 2008 will struggle to reach their targets due to the current withdrawal of international investors from the market.
In South Africa, the economically important mining sector is suffering from the decline in commodity prices. Gross domestic product growth in South Africa in 2009 is likely to be between 2-3%, well below the 5% level that was sighted in 2007. Continued expenditure on infrastructure will help to underpin the growth rate above 2%, whilst overall private equity activity is suffering.
In Nigeria in 2009, growth is expected to remain around 6%.
Earlier this month, CDC committed $40 million to two funds targeting SMEs in south-east and central Asia.
D.C.