(4 minutes read)
· Mergers and acquisitions were on the decline across Africa in the first half of 2020 in terms of both volume and value, according to Baker McKenzie, an international law firm.
· The economic uncertainty is likely to cause a reduction in foreign direct investment in Africa and the trend may take time to reverse and in the short term, the possibility of recovery is highly improbable.
Mergers and acquisitions were on the decline across Africa in the first half of 2020 in terms of both volume and value, according to Baker McKenzie, an international law firm. The law firm also says that the economic uncertainty is likely to cause a reduction in foreign direct investment in Africa and the trend may take time to
reverse and in the short term, the possibility of recovery is highly improbable.
The firm forecasts a recovery in the medium term thanks to Africa’s renewed partnerships with major global economies coupled with recent policies on trade and investment. Now, major global players including from China, Britain and the US are focusing on Africa to find newer avenues for trade and investment.
Four countries -South Africa, Nigeria, Kenya, and the Sub Saharan Africa region- have received special treatment in the report. Referring to Kenya, the report said it had experienced a 50% drop in volume and a 51% decline in value in M&A deals in H1 2020 compared to H1 2019.
The value of M&A transactions in South Africa was at US$3.3 billion, down 60% in the first half of 2020. Compared to the same period last year, this was down from US $8.2 billion registered during the same period last year (H1 2019).. The M&A deals declined by 18% year-on-year basis, with 132 transactions recorded in H1 2020, down from 160 in H1 2019.
However, deal making in Nigeria increased by 44% with 26 deals in H12020 compared to 18 in H1 2019. However, the value of deals went down by 46% to US$204 million in the first half of 2020, from US$375 million in H1 2019. The number of cross border deals increased by 18% in comparison to the first half of 2019.
In the Sub-Saharan Africa (SSA) region, M&A volume decreased by 24% to 254 deals, as against 338 deals for the same period last year. The total value of M&A deals was down 56% to US$6.8 billion in the first half of 2020, compared to US$15.3 billion in H1 2019. The majority of deals in the first half of this year were cross border, with 160 transactions totaling US$4.8 billion.
