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Description

Africa’s PE industry was cultivated by DFIs that had a mandate to invest in private sector businesses in Africa to promote social and economic development. Gradually the industry expanded and by 2020, there are more than 150 active fund managers of different sizes spread across geographies and sectors in Africa. Close to USD 20 billion funds were raised from 2014 to 2020 in African PE. DFIs such as EIB, AfDB, CDC Groups, Proparco, IFC etc. still are the largest investors in PE funds in Africa.

In 2020, 74% of PE investors reported having a responsible investment strategy in place for climate action, 34% regularly conduct a climate risk assessment of their portfolios and 45% have made changes in their investment strategies based on these assessments. PE and VC are traditionally very risk averse, requiring market-based returns that are risk adjusted for the stage of investment and other country and industry risks. As noted above, many of the funds in Africa have DFIs as anchor investors, which allow them to take a higher level of risk (and therefore potential for a lower return) than typical PE/VC funds.

 Modest risk appetite Risk Appetite

Risk averse policy approach and/or mandated commercial returns required.

 Voluntary efforts to embed climate change in investment decisions Climate Mandate

Largely voluntary efforts to embed climate change strategy in investment decisions; may have negative mandate on climate harming investments.

 Capital raising unrestricted Ability to Raise Funds

Presence of legal/regulatory frameworks to embed climate change in investment decisions.

 Full flexibility to determine policy mandates and deploy capital Flexibility to Deploy Funds

Full flexibility to determine policy mandates and deploy capital through any type of funding vehicle.
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This project has been developed in partnership with the Global Center on Adaptation

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