Private equity firm sees potential in French-speaking West Africa

East Africa is arguably the continent’s most attractive region for investment, while West Africa is more fragmented with a relatively complicated business environment.

Stephen Dawson

So says Stephen Dawson, chairman of UK-based pan-African private equity firm Jacana.

“[East Africa] has a 120 million population and the countries have similar legal and banking systems. There are however some weaknesses. Some regulations in terms of free capital flow, tax regime and bureaucracy can be inhibiting. The East African Community integration is a good initiative and should help in addressing some of these issues,” Dawson told How we made it in Africa in an interview from London.

“West Africa is a very different market. Nigeria is huge and very complex, Ghana is relatively small and then there are the francophone countries with very different financial and legal structures. It is quite a fragmented region which means additional costs of doing business. There is little private equity funding there and we would like to expand across these countries,” said Dawson.

“We want to scale our operations and expand to Ethiopia and francophone West Africa. French-speaking West Africa is our current top priority. By the end of the year we are looking to establish a new fund to invest in existing and new markets,” he added.

Founded in 2008 by a group of UK entrepreneurs, Jacana’s approach is to partner with, and develop, local private equity fund managers. The combination of Jacana’s capital and expertise enables its partners to grow their teams, build their track records and raise larger funds. Jacana has therefore partnered with Fidelity Capital Partners, a Ghana-based private equity firm with a total of US$32m under management, and InReturn Capital, based in Kenya.

Through its partners, Jacana invests in businesses that typically have 10 to 200 employees and need investments of between $1m and $5m. Its funds in Ghana and Kenya have so far invested a total of $20m in 18 companies. One of Jacana’s recent investments, through InReturn Capital, is Reltex Tarpaulins Africa, a supplier of relief materials to the humanitarian sector.

Long-term business

Although Jacana is yet to make profits, the firm is optimistic that its investments in Africa will yield good returns.

“I think it is too soon to record returns on investments. We are still in the investment stage. This is a long-term business. The progress is actually good and we expect a positive financial outcome,” said Dawson.

“Our long-term goal is to generate healthy financial returns. Equally important is developing social returns in the economies we operate in, that is: job creation, contributing to local infrastructure and developing entrepreneurship,” he noted.

Last year Fidelity Capital Partners signed a memorandum of understanding with the Ghana Stock Exchange (GSE) that involved pre-initial public offering financing and an agreement for the private equity firm to use the exchange to exit some of its investments.


“The challenges we have faced were mainly about a lack of experience among entrepreneurs. We do not have the same level of infrastructure compared to Europe. A lot of people don’t understand private equity and its benefits,” said Dawson.

He explained that an ideal ‘fundable’ business should have a strong management team of people who have experience, know their sector, their competition and market, and are committed to their company. They should also demonstrate drive and ambition. The business should have growth potential, be scalable and demonstrate ability to generate strong financial growth and job creation.

Opportunities in SME market

Although private equity in East Africa has grown in recent years, gaps in funding still exist, especially in the SME market.

“Most venture capital funds in East Africa have been making large transactions with minimum investments of $5m to $10m. The smaller the amount an entrepreneur needs, the more difficult it is for them to get funding. We plan to make somewhat large transactions, but we are committed to the SME market,” Dawson noted.

He is optimistic about Africa’s future, noting that the gradual process of democratisation in African counties is a safeguard of political stability, which coupled with promising returns on investment, should attract more international investors. The consumer market, he said, is a very important driver of growth across Africa.

His advice to foreign private equity investors eyeing Africa? “It is important to have people on the ground. You cannot make assumptions; what works in one market may not work in another.”