For years, institutional investors in South Africa (or across Africa) have treated public markets as the clearest expression of economic health. If it was not listed, it was not often considered. That assumption is becoming harder to defend.
Across much of the world, traditional public equity markets are no longer the natural home of growth businesses. There are exceptions, of course, but the broader trend, and it is visible on the JSE too, is one of shrinking breadth, fewer listings and a market structure that increasingly favours scale, maturity and administrative stamina over innovation.
The result is that investors who rely only on listed markets are seeing a narrower and increasingly distorted slice of the economy, thus a decreasing investment opportunity set.
From the corner shop to the megastore
A recent episode of the Inside Private Markets series on EBnet captured this neatly through an analogy offered by David Moore of BlueEarth Capital. Traditional listed markets, he suggested, are like a corner shop: familiar, convenient, but limited. Private markets, by contrast, resemble a megastore. The shelves are deeper, the categories broader and the choice far more representative of where real economic dynamism is taking place.
But the case for private markets is not merely that they offer more choice. It is that they allow investors to participate in value creation at the point where it matters most.
Patient capital does more than observe – it helps build
In listed markets, investors are often buying exposure to mature businesses whose operating models are already established and whose growth is incremental. In private markets, capital enters earlier, when companies still need strategic support, governance discipline and patient backing. This is not passive ownership. It is an active partnership.
That is why private markets should be viewed not simply as an alternative asset class, but as part of Africa’s real growth engine.
The research function lies in identifying businesses and sectors that have been screened out of public markets by design. Through exclusivity, detailed due diligence and closer operational access, private market investors can uncover businesses with real potential long before they are visible in benchmark indices. These are often companies that are too small, early-stage or too operationally stretched to contemplate the bureaucracy of a listing, even though their products or services may be central to future growth.
The “development” function comes once capital is allocated. Patient capital gives management teams the runway to invest, build and adapt without the pressure of quarterly earnings expectations or the daily share price volatility. Investors are not merely taking a view on future outcomes; they are helping shape them through governance, networks, technical support and long-term capital commitment.
A continent with unapparelled opportunity for institutional investors
Africa’s institutional investors are beginning to channel a growing pool of pension capital into private markets and other alternative assets, but similar to South Africa, the shift is still nascent and uneven. Having spent some time with Kenyan retirement trustees last year, the challenges of unfamiliarity and low adoption were not unique. Kenya’s pension AUM climbed to approximately Ksh 2,8 trillion (ZAR 356 billion) in December 2025 and this rising industry scale across focus markets increases the pool of capital that can be directed to private markets and alternatives, which saw 85.1% growth in 2024.
At a broader level, a joint IFC–AfDB study found that pension fund investment in “alternative assets” remained small (generally around 0- 2.7% of AUM). This has remained the case even as growing pension system assets under management have begun to stimulate demand for newer investment structures such as infrastructure, private equity and venture capital, REITs and green instruments. In most markets, allocations to alternatives still sit well below national limits, with portfolio exposure continuing to be heavily concentrated in government securities.
Converting rising interest into meaningful allocations for the continent’s development will therefore depend on strategic shifts to include more private markets, scaling pooled alternative vehicles, improved disclosure and valuation standards, and targeted trustee knowledge sharing and manager capacity building.
Where Africa’s next chapter will be written
Africa’s next chapter will not be written solely on the trading screens of its public exchanges. It will be written in private companies solving practical problems, in infrastructure that expands access and resilience and in overlooked parts of the economy that formal markets have failed to capture.
For investors, the implication is simple: private markets are no longer a peripheral allocation or merely an add on. They are where much of the continent’s genuine next phase of growth, scaling and economic development is taking place. If public markets are the shop window, private markets are the workshop and that is where Africa’s future is being built.
