Kenya came in fifth among top destinations for merger and acquisition activity in Sub-Saharan Africa over the next two years, according to a new report by KPMG.
The professional services firm surveyed 150 executives on M&A prospects across the region. Kenya was cited by 14% of respondents as a country they are considering for deals, ranking behind only South Africa at 50%, Nigeria at 30%, Tanzania at 15% and Ghana at 14%.
The tech sector shows particular promise in Kenya. According to the report, 43% of executives surveyed said e-commerce represents one of the most attractive tech investment opportunities in Sub-Saharan Africa over the next two years. Fintech followed closely, with 41% naming it a top area of interest.
Financial investors are especially keen on fintech in the region. Nearly two-thirds of those surveyed expect their fintech investments in Sub-Saharan Africa to increase moderately or significantly through 2025.
“There are many fintechs in the region that have optimised their solutions in accordance with the latest market expectations and it is a segment that has delivered profits when other industries failed to remain sustainable,” said the managing partner of a South Africa-based financial investor.
Kenya’s renewable energy sector also shows strong potential thanks to abundant natural resources like wind and solar power. The country is making strides in developing off-grid and utility-scale renewable energy projects.
Overall M&A activity in Sub-Saharan Africa is expected to rise significantly over the next two years as risk appetite rebounds after the chill on deals during the pandemic.
The report identifies the energy and mining sectors as particularly promising in the near term. About half of respondents ranked oil and gas as the most attractive industry for investment through 2025. Renewable energy also shows strong potential thanks to Africa’s natural resources.
“Investments in the renewables segment will increase in the next five years,” the French PE executive said.
Tech and fintech are also drawing investor interest. The report found e-commerce and fintech topped execs’ wish lists for tech investments in the region.
“There are many fintechs in the region that have optimised their solutions in accordance with the latest market expectations and it is a segment that has delivered profits when other industries failed to remain sustainable,” said the managing partner of a South Africa-based financial investor.
“M&A had declined in the wake of the pandemic,” said the EVP of a Brazilian strategic investor surveyed. “But since then, activity has picked up and there is tremendous growth in many industries. I expect the same trend to continue in the coming years.”
