Anyone curious about the future of capitalism in Africa might want to take a look at the Sierra Investment Fund (SIF). In 2006, Freetown-based ManoCap, a private equity (PE) firm with a social responsibility bent , launched SIF to invest in Sierra Leonean companies. The CDC Group, a UK government agency, contributed $5 million to the endeavor.

Money in hand, SIF’s managers at ManoCap went to work. In October 2008, they made their first purchase: a half century-old seafood company called Sierra Fishing Company. The next month, they made two more buys: an ice maker called Ice Ice Baby— which sold ice, primarily to the local fishing industry—and a mobile payments company.

If the fund’s strategy wasn’t clear after its first year, it was in October 2009 when it cut its fourth and final deal, for a Freeotwn trucking company called Dragon Transportation which, in the CDC’s words, “provides transport services to the Sierra Leonean market with a focus on the distribution of fish, ice, and other perishables.”

Thirteen years later, the CDC (now called British International Investment) still holds an “active” investment in SIF, according to its website. Though few people know it, British taxpayers own a stake in the biggest and most tightly integrated seafood operation in Sierra Leone.

For investors looking to bank on the “Africa rising” story, PE has proven the surest vehicle for success. Last year, the industry pumped $7.1 billion into African companies, beating the 2017 record by more than $2 billion. It’s easy to see why investors would want to place their bets on the continent: out of 30 countries that recorded an average growth rate above four percent from 2016-2020, 14 were in Africa. But stock exchanges— the standard means for investing in companies in developed countries— are generally weak in Africa.

Even where exchanges exist, investors want guides— people who know “how things work” and see opportunities they can’t. Since African businesses— even really successful ones— often do not adhere to international standards for industries they operate in, investors also want people who can hold them to those standards so as to make them resemble more closely the European or American companies they’re used to. Private equity does all of that.

In Africa, PE is staking claims in everything from hotels to private schools, poultry farms to bottling plants. Wherever it goes, it’s creating new pathways for investors to introduce capital and influence to African economies. Given PE’s rising influence in Africa, it’s important to consider how activists might influence the industry. To understand how one might do that, it helps to understand how PE works.

Private equity begins with a partnership. On one side is the PE firm— the “general partners,” or “fund managers” in industry terminology. On the other side is an assortment of outside investors, known as the “limited partners.” Private equity funds all over the world typically recruit public entities as investors, from pension funds to university endowments. Funds operating in Africa attract the same groups, but to them, they typically add development finance institutions (DFIs), like British International Investment or the International Finance Corporation, the private-sector lending arm of the World Bank Group. (A research project I conducted with Joeva Rock found that more than half of funds investing in Africa from 2006-2018 had received DFI support.)

For outside investors, PE means access to tremendous power: using their money, fund managers not only buy stakes in companies, they also apply their expertise in business and finance to make them bigger and more profitable. But although both sides pool their money in a single fund, only the fund managers decide where the money goes.

Consider the example of Resource Capital Fund VII, a fund invested in mining companies active in Burkina Faso and Guinea. According to the terms of the partnership, which I obtained through a public records request, the fund managers reserved the sole right to choose where to invest the money. They didn’t even have to tell the outside investors where they planned to invest ahead of time. From the time investors signed the agreement, they could expect the fund to hold their capital for 10 years—a standard lifetime for a PE fund. That is, unless the fund managers decided to keep the money for another two, in which case they reserved the right to do so with or without the outside investors’ consent.

Even the normal path of recourse for an investor scorned—the courts—were limited under this agreement. By signing it, investors waived their right to a jury trial and agreed to only bring a lawsuit in the country where the fund was domiciled—in this case, the notoriously business-friendly jurisdiction of the Cayman Islands.

So how can people hold the PE industry to account? Though pension funds sometimes act as though their first responsibility is to capital, and not to their constituents, they are not beyond the influence of a committed public. In 2020, a coalition of unions and advocacy groups in New York compelled the state legislature to mandate pension divestment from fossil fuels and increase investments in clean energy. The new rules only applied to “public equities,” or investments traded on stock markets, but one could see how similar coalitions could direct their attention to PE. To begin with, they could tell investing bodies to ask fund managers questions. They could also insist that fund managers sign binding human rights and environmental commitments and disclose where they intend to invest. The PE industry is competitive: if pension funds and endowments don’t like what they hear, or if the managers for one fund refused to make any concessions, they could always take their money to another.

What is critical to remember is that once they invest in a PE fund, outside investors will likely have little to no power to influence it. After they’ve committed their capital, it may be too late to force change, no matter how much they’ve invested, or how urgently the world needs it.