Access to venture capital in Africa: the role of public institutions and corporate governance

Abstract

The venture capital market in Africa remains relatively undeveloped. But, over the last decade, Africa has received much interest from venture capitalists. It is one of the most attractive emerging markets. Investor confidence has increased due to the performance of venture capital firms. The objective of this study is to indicate the influence of public institutions and corporate governance on access to venture capital in Africa in 2019. Based on multiple regression analysis, the relationships between public institutions, corporate governance and access to venture capital are identified. The results show that the strength of auditing and accounting standards, business freedom, fiscal health and judicial effectiveness had significant and positive effects on access to venture capital. However, shareholder governance and trade freedom had significant and negative impacts on access to venture capital. The study underlines that policy-makers in Africa have a considerable interest in reinforcing the economic environment and corporate governance.