Sub-Saharan Africa continues to capture investor interest, especially in mining, energy, and tech. The region’s natural resources, growing population, and digital shift fuel M&A activity, with more than 300 deals closed last year.

Sub-Saharan Africa’s merger and acquisition (M&A) market remains dynamic after a record year in 2022. Despite political turbulence and economic challenges, investor interest stays solid. Last year, 304 deals were recorded, with a total value of $18.9 billion, according to KPMG’s latest report, "Doing Deals in Sub-Saharan Africa 2024," published in October. The momentum has even accelerated in early 2024 when the second quarter saw M&A deals hit $11.8 billion, the highest value in two and a half years.

Natural resources remain a key factor in the region’s economic dynamism. The mining sector saw its value surge 140% year-on-year, reaching $5 billion. A highlight of this growth was the $2.08 billion acquisition of Khoemacau Copper Mining by Chinese giant MMG. With global demand for metals like lithium and cobalt skyrocketing, sub-Saharan Africa, rich in these strategic minerals, continues to attract major investors.

Renewable energy is also playing a growing role. Engie and Meridiam acquired South African clean energy company BioTherm Energy for $1 billion. The global shift to renewable energy and the need for resources to support this transition keep Africa in the sights of major players.

Southern Africa is the top player in SSA’s M&A activity. Botswana and South Africa, with their wealth of resources, accounted for six of the ten biggest deals in 2023. However, West Africa is also making strides, with 44 deals recorded. Nigeria, the region’s largest economy, remains a top destination, especially for the booming tech sector, which is attracting more and more capital.

East Africa, led by Kenya’s recovering economy (which grew 5.6% in 2023), posted its second-best M&A volume in years. The region, once overlooked, is now gaining ground.

In Francophone Africa, a record 17 deals were made. Countries like Côte d'Ivoire and Senegal stood out, driven by economic reforms and major infrastructure projects that are attracting foreign investment.

The technology, media, and telecommunications (TMT) sector also continues to thrive. In 2023, despite a slight drop in the number of deals (50 compared to 53 in 2022), the value of transactions rose 27% to $1.4 billion. One major example is the $728 million merger between PowerFleet and MiX Telematics in South Africa. With the rise of e-commerce, big data, and fintech, in a region where over 70% of the population is under 30, tech is becoming a critical driver of economic growth.

Challenges and Opportunities

Despite this optimistic picture, KPMG points to some challenges. A lack of transparency, regulatory hurdles, and pricing mismatches can make negotiations lengthy and difficult, KPMG notes. Reliable financial data is often scarce, complicating risk assessments and causing some investors to scale back their ambitions. However, the underlying momentum remains strong. Investors are betting on physical assets and high-growth sectors. Valuations in sub-Saharan Africa are often based on revenue or EBITDA multiples, with more than half of transactions following this model. Some, particularly in the fast-growing tech sector, are willing to pay EBITDA multiples over 8x to seize market opportunities, though this raises the risk of overvaluation in volatile and uncertain political environments.

Optimistic Outlook for M&A Growth

The future of M&A in sub-Saharan Africa looks promising, with strong growth forecasts for key sectors. According to KPMG, which surveyed 150 senior executives and business leaders experienced in transactions on the continent, nearly 88% of investors are willing to reinvest in the region despite persistent challenges. East Africa is seen as the most attractive region, followed by West and Southern Africa. South Africa and Nigeria, the two largest economies, remain top investor destinations.

The mining and energy sectors are expected to continue driving future deals, with 71% of strategic investors anticipating new opportunities in mining and 51% in oil and gas. The growing global need for rare metals like cobalt and lithium for energy transitions reinforces the region’s appeal.

In the tech sector, around 52% of financial investors plan to focus on developing e-commerce and fintech. These industries are expanding rapidly thanks to the region’s digital transformation. With over 70% of the population under 30 and increasing internet and mobile phone access, new markets are emerging.

Environmental, social, and governance (ESG) factors are also expected to play a larger role in investment decisions, with 98% of financial investors and 89% of strategic investors believing ESG issues will have a stronger impact on transactions in the next two years.