Energy, mining & utilities (EMU) sector saw the highest aggregate deal value in Sub-Saharan Africa (SSA) in 2022, raking in $7.8 billion out of the $19.2 billion deals in the region, according to a report by KPMG, a top professional service company.
According to the report titled “Doing Deals in Sub-Saharan Africa,” the sector also recorded the region’s highest deal volume at 64 deals in 2022, matching the total for 2021. In total, there were 297 deals valued at $19.2billion in the region in 2022.
The report, which noted that the region is home to a wealth of natural resources, a major attraction for investors who can take a long-term view, stressed that availability of physical assets and natural resources was the most frequently cited driver for respondents’ recent acquisition or investment.
The report noted that mergers and acquisitions, M&A deal activity in SSA made an impressive comeback in 2022 following the pandemic and, unlike the rest of the world, posted record transaction volumes.
“There were 297 deals announced last year — a 21% increase from 2021 and almost double the activity seen in 2020. While total deal value fell sharply year-on-year in 2022, it remained within a range of annual aggregate values seen in the previous decade, reaching$19.2bn, a notable recovery from $8.6bn in 2020.” it noted.
While expressing optimism for future deals, the report recorded South Africa and Nigeria as the top investment destination for investors. It said most international investors expressed willingness to return to the market, with 68% indicating that their experience of dealmaking in the region was positive.
Commenting on the report, Partner & Head, Transaction Services KPMG West Africa, Ijeoma Emezie-Ezigbo, noted that Sub-Saharan Africa continues to present a significant opportunity for investors. She stressed that the region’s demographics and significant headroom for economic development are among the factors which will continue to spur growth over the coming years.
She advised that investors that take medium-to-long-term positions in the region with careful asset exposure are primed to potentially reap better long-term returns.
She, however, noted that recent global and regional trends posed challenges to investment opportunities in the region.