The Untapped Potential of Sub-Saharan Africa: A case study of the development of private capital and its impact on the last frontier of growth

Abstract: As the market is starting to see an increase in private capital investments in sub-Saharan Africa, questions have been raised as to what has changed from the perspective of investors when it comes to investing in a market that has traditionally been underfunded. Through a case study analysing the risks, challenges, and opportunities of investing in sub-Saharan Africa, we attempt to analyse the reasons for traditional investor hesitancy and better map the risk and reward landscape as it is seen today. The findings state that the most prominent risk investing funds face is currency exposure. Furthermore, it is found that discrepancies in actual risk and perceived risk are a significant deterrent to investment in sub-Saharan Africa. The opportunities for private capital in sub-Saharan Africa are considered to be superior financial returns in comparison to traditional markets and the potential for development impact, both at the company and country level. This paper offers a broad analysis of the sub-Saharan African market, and through comparison with the Nigerian market offers insights into the development of private capital and preconditions for further growth. The paper contributes to existing literature with its focus on sub-Saharan Africa as well as the impact private capital can have on economies in the region.