As a crucial source of financing for SMEs, private equity (PE) fund managers can help develop a sound culture of corporate governance within an organisation, according to the African Private Equity and Venture Capital association (AVCA). This leads to more sustainable organisations in the long run.
‘Private equity in its simplest form is an investment in a company, which allows it to grow so that more people can get hired and more children can go to schools,’ states the AVCA. ‘it puts more money into circulation, and that means more tax revenue for local governments.
‘It improves the skills of the workforce and transfers knowledge from investors to local entrepreneurs and employees. it may be simplistic but it is really about developing economies.’
Erika van der Merwe, CEO of the Southern African Venture Capital and Private Equity Association (SAVCA) says: ‘In economies where capital markets are underdeveloped, this inflow of capital is essential in supporting economic growth, in ensuring the transfer of skills and to help develop local financial, legal and business infrastructure.’