Uganda is among the top ten countries in sub-Saharan Africa where companies are looking to invest or expand over the next few years, according to a KPMG report released Friday.
The country was selected by ten per cent of senior executives from companies that have invested in sub-Saharan Africa (SSA) over the past four years and anticipate further acquisitions or expansion of current operations in the next two years. South Africa ranked first as the leading prospective investment destination, selected by half of the respondents, trailed by Nigeria at 30 per cent and Tanzania at 15 per cent. Ghana, Kenya, and Mauritius each received 14 per cent.
The survey polled 150 senior executives, split evenly between domestic and international investors. Of those surveyed, 74 per cent expressed interest in making another acquisition or investment in sub-Saharan Africa within the next two years, while 77 per cent were considering additional capital injections into current acquisitions. In addition, 68 per cent predicted an increase in deal activity over the next two years, including 31 per cent who were optimistic that it would increase significantly. The survey was conducted in the second half of 2022.
Just under half of respondents, 48 per cent, cited the oil and gas sector as the most attractive investment opportunity over the next two years. Consumer goods came second with 39 per cent, followed by mining with 37 cent. Financial technology and industrials & chemicals also emerged as attractive options for 33 per cent and 32 per cent of respondents respectively.
South Africa and Nigeria offer compelling investment opportunities due to their large economies offering significant market opportunities and, in the case of Nigeria, a huge consumer base of 220 million people. In addition, both countries have abundant natural resources – Nigeria has crude oil, while South Africa has diverse mineral deposits. The report highlights that both countries act as regional economic hubs, facilitating access to neighbouring markets and regional integration efforts.
Record number of deals in 2022
SSA saw unprecedented transaction volumes for mergers and acquisitions in 2022, in stark contrast to the subdued activity observed in other regions of the world. The number of announced deals rose 21 per cent year-on-year to 297 – almost twice as many as in 2020. However, total deal value fell significantly to $19.2bn from over $95bn in 2021, but KPMG said this was within the range of average annual values recorded over the past decade.
South Africa led the region in attracting the largest M&A deals and was also home to the most active local investors. Five of the top ten announced deals in 2022 took place in South Africa, while four of the five deals valued at more than $1bn also took place in the country. Two of the top ten deals were completed in Nigeria, with one each in Tanzania, Angola, and Cameroon.
The largest deal was MSC Mediterranean Shipping, Remgro and SAS Shipping Agencies Services’ purchase of a 55.4 per cent stake in private healthcare services group Mediclinic International for $2.6bn; both the target and the buyer are South African companies. It was also the only transaction in the pharmaceutical, medical and biotechnology sector among the top 10 deals by value in 2022, five of which were in either mining or energy.
Southern Africa recorded 151 M&A deals, up 14 per cent on the previous year, followed by East Africa with 75 deals, a record for the region and 60 per cent more than in 2021. East Africa’s top deal was the $0.88bn acquisition of Tanzania’s Lifezone Metals Limited, a nickel producer, by US special purpose vehicle GoGreen, which will list the company on the New York Stock Exchange. Meanwhile, West Africa saw 39 deals announced and Francophone SSA had a record year for M&A volume with 15 deals completed.
The energy, mining and utilities sector was the most active and contributed the most to deal value, with 64 deals worth $7.8bn. Financial services came second with 55 deals, followed by technology, media and telecommunications with 47 deals. This breakdown tells the story of M&A in the region, says KPMG, with investors “drawn to SSA’s abundant natural resources, demand for connectivity, technology that enables last mile access, and sectors such as healthcare, financial services and education that are benefiting from a rapidly expanding consumer market and are key to unlocking the region’s vast growth potential.”
