• African M&A deals fall 21% as foreign investors retreat
• South Africa shows resilience; West and North Africa slump
• Energy leads activity; private equity and tech sectors contract

The African mergers and acquisitions (M&A) market is experiencing a significant slowdown, with the number of transactions falling 21% in the first half of 2025, according to the DealMakers Africa (Q2 2025) report. This trend reflects a retreat by foreign investors, unnerved by rising global interest rates, a strong U.S. dollar, and persistent political instability in several major African economies.

South Africa excluded, transactions recorded across the continent totaled $4.66 billion over the first six months of the year, a 16% drop from the $5.52 billion recorded over the same period in 2024. The market value remains 61% below its 2022 peak of nearly $12 billion.

Analysts suggest the decline is symptomatic of a confidence crisis in African private equity, which remains overly reliant on offshore capital.

“While not unique to Africa, rising global interest rates, a strong US dollar and geopolitical uncertainty have seen international investors retreat to safer, higher-yielding markets. For Africa, where private equity funds remain heavily reliant on offshore capital, this has translated into weaker fundraising and a more selective deployment of capital,” the DealMakers Africa report noted.

South Africa Shows Resilience; Other Regions Suffer

The report highlights the notable resilience of South Africa, which accounted for nearly 45% of the continent's transactions. The country logged about 80 of the 174 deals, with an estimated value of $2.5 billion. South Africa benefits from a deep financial ecosystem, a solid base of institutional investors, and stable regulation, which helps cushion the withdrawal of foreign capital.

Elsewhere, the slowdown is more pronounced. In West Africa, deal volume plummeted about 35%, bringing the total value of transactions to $650 million. Nigeria, weighed down by the Naira's depreciation and an uncertain political and energy climate, drove most of the decline. Ghana and Côte d'Ivoire fared better, but transactions there remained primarily domestic.

East Africa saw a more contained drop of 15%, with about 40 deals recorded, half of which occurred in Kenya. However, a central bank interest rate hike to 13%, combined with a slowdown in credit, has curbed cross-border acquisitions.

Activity in Central Africa remained marginal, with fewer than 10 transactions concentrated in the extractive sector (oil, mining) in Gabon, Congo, and Cameroon. The lack of economic diversification and shallow financial markets continue to limit the region's attractiveness.

Finally, North Africa recorded a 25% decrease in the number of deals, for an estimated value of $400 million. Morocco and Egypt, previously key drivers, are experiencing a contraction in European financing and a slowdown in energy investments, despite some activity in logistics and services.

Energy Sector Remains a Key Driver

In this sluggish environment, the energy sector remains the primary driver of M&A activity. Two major transactions in this sector alone accounted for nearly $2.2 billion, or almost half of the total recorded transaction value on the continent.

These deals primarily involved disinvestments of oil and gas assets by international majors and regional consolidations among African players seeking to strengthen energy autonomy. Significant transactions included Eni’s sale of stakes in several oil and gas assets in Côte d'Ivoire and the Republic of the Congo to Vitol, estimated at $1.65 billion, and TotalEnergies’ sale of its 12.5% stake in Nigeria's Bonga offshore field to Shell and Agip, valued at approximately $510 million.

Private equity operations have halved, with 75 deals valued at $341 million, compared to 121 operations totaling $554 million in the same period in 2024. A further sign of the pullback is that all completed private equity transactions were led by African investors, with no foreign participation. This massive retreat is a result of weak stock markets, low activity from strategic buyers, and exit difficulties for funds, which limit their appetite for new investments.

The correction in valuations across the technology and fintech sectors, following the euphoria of 2022, has redefined investor priorities. Investors are now repositioning toward defensive sectors such as healthcare, agriculture, logistics, and food value chains. This shift indicates a return to fundamentals, favoring more tangible and less speculative economic areas.

Long-Term Outlook Unchanged

While the current economic climate is challenging, the continent's fundamentals remain robust. Demographic growth, projected to push the African population past 1.7 billion by 2030, rapid urbanization, and massive needs in infrastructure, energy, and health continue to underpin investment potential.

Despite market caution, many analysts believe the current correction could create a buying opportunity for long-term investors. More realistic valuations, combined with strong structural demand in productive sectors like agriculture, logistics, and renewable energy, pave the way for a new phase of consolidation.

“All that is needed is patient capital, and Africa’s fundamentals will ensure it remains firmly on the radar, with the current environment presenting entry points at more attractive valuations,” the DealMakers Africa team concluded, stressing that the continent's trajectory remains one of opportunity, rather than uncertainty.

Fiacre E. Kakpo