According to recent findings from KPMG, South Africa has been identified as the prime choice for investment and deal-making, surpassing Nigeria, known for its population of over 200 million.
As reported by the International Monetary Fund this month, South Africa is set to become the largest economy in Africa next year, surpassing Egypt and Nigeria. The country’s gross domestic product is expected to reach $401 billion (R7.8 trillion), slightly ahead of the other two leading regional economies.
Recent data from KPMG has also indicated that South Africa is the foremost choice for investment and deal-making, outpacing Nigeria, renowned for its population exceeding 200 million.
According to analysts at KPMG, in 2022, South Africa contributed to five out of the ten most significant deals in SSA by value. The report highlighted that 50% of respondents favored South Africa as the top destination for future investment in SSA, followed by Nigeria at 30%.
Overall, merger and acquisition operations throughout sub-Saharan Africa (SSA) experienced a notable resurgence in 2022. The region witnessed approximately 297 announced deals during the year, marking a 21% rise from the previous year. However, the total value of these deals amounted to $19.2 billion, significantly lower than before.
In 2022, South Africa (SA) was involved in five out of the top 10 highest-value deals documented for sub-Saharan Africa. The most substantial transaction was the acquisition of a 55.44% share in private healthcare services provider Mediclinic International by MSC Mediterranean Shipping, Remgro, and SAS Shipping Agencies Services, amounting to $2.6 billion.
Additionally, South Africa participated in two significant acquisitions within the energy and mining sectors, which were part of the dominant category in the top 10 M&A deals of 2022. Among the five energy and mining transactions in the top 10, South Africa’s involvement was prominent, including Northam Platinum’s purchase of a 63.3% share in Royal Bafokeng Platinum for $1.7 billion and Egypt’s Infinity Energy acquiring Lekela Power for $1.5 billion. Tanzania, Angola, and Nigeria each had one deal within this category as well
Over the upcoming two years, South Africa and Nigeria are projected to be the dominant forces in terms of deal-making activity in sub-Saharan Africa, according to those intending to make acquisitions in the region. Nearly half of the investors surveyed regarding their future acquisition plans in sub-Saharan Africa expressed a strong interest in targeting opportunities in South Africa, while 30% showed a preference for investments in Nigeria.
Deal activity in the Technology Media and Telecom (TMT) sector, along with financial services, is also a focal point across the region. However, the total deal value for TMT targets in sub-Saharan Africa in 2022 was notably lower compared to other sectors, which was seen as a surprising trend.
This year, South African internet company Naspers and Dutch firm Prosus revealed the termination of their $46.1 billion merger, citing concerns that the cross-shareholding arrangement within the deal was hindering stock buybacks. Capital market investors had also perceived the arrangement as overly intricate.