Recent data from KPMG reveals that South Africa has emerged as the top choice for mergers and acquisition deals in Sub-Saharan Africa, surpassing Nigeria, which is renowned for its population of over 200 million.
The report titled “Doing Deals in Sub-Saharan Africa” examines the volume of deals, the macroeconomic state of the Sub-Saharan region and how attractive it is to foreign investment and capital.
According to the report, five of the top ten mega deals in the region were in South Africa, two of the deals were from Nigeria while Tanzania, Cameroon and Angola had one place each in the top ten.
The report states,
- “South Africa was the source of five of the 10 largest deals by value seen in SSA in 2022. The top destinations for future investment in SSA are South Africa, favoured by 50% of respondents, followed by Nigeria at 30%,”
Energy and mining deals dominate
In total, there were 297 deals valued at $19.2billion in the region in 2022 with energy and mining deals dominating the top ten in the region.
The energy and mining industry accounted for 64 transactions raking in $7.8 billion for the region.
South Africa also stood out with two significant mega-deals in the energy and mining sector acquisitions, a category that held a prominent presence in the list of the top 10 M&A deals for 2022.
- “According to the United Nations, Africa is estimated to hold around 30%, 12% and 8% of the world’s mineral reserves, oil and natural gas reserve, respectively.”
- “The region boasts impressive deposits of gold, diamonds, platinum, cobalt and uranium, with South Africa, Botswana and the Democratic Republic of Congo being prominent producers.”
- “These precious commodity stores make Africa especially attractive for strategic investors.”
Technology, Media, and Telecom (TMT) sectors, as well as financial services, have garnered notable interest in deal-making activities throughout the region.
Nevertheless, the total deal value for TMT targets in Sub-Saharan Africa in 2022 was notably lower compared to other sectors, a somewhat surprising trend.
The report further projects that in the next two years, South Africa and Nigeria will account for a “lion’s share” of acquisitions in the SSA region.
KPMG’s result of the survey of potential investors shows that 50% of investors will be looking towards South Africa with about 30% focusing on doing deals in Nigeria.
However, all is not bright for the region as challenges such as political instability, corruption, and macroeconomic volatility continue to deter potential investors.
The report noted,
- “For all the potential upside to investing in SSA, there are hurdles to overcome. Managing economic volatility and currency risk (19%) and political volatility (17%) were cited as the biggest challenges faced by respondents when completing their most recent deal in the region.”