KPMG says the top destinations for future investments in the next two years in sub-Saharan Africa (SSA) are Nigeria, South Africa, and Kenya.
In its report titled ‘Doing deals in sub-Saharan Africa 2024,’ KPMG conducted a survey among international and domestic investors.
KPMG said more developed African nations are likely to benefit when it comes to the location of future deals.
“The top destinations for investment in the next two years are South Africa (28%) and Nigeria (26%),” the report reads.
“These economic powerhouses were followed, at some distance, by Kenya (14%). No other country was mentioned by more than one-in-ten respondents overall.
“The dominance of these countries in the M&A landscape reinforces the importance of both economic and resource fundamentals.”
According to KPMG, South Africa’s economy has been hit by power shortages and logistics bottlenecks.
However, the report noted that South Africa’s offer of abundant resources, a developed financial market, and an enormous youthful population “remains a prime draw for investors”.
“Similarly, Nigeria has SSA’s largest population, the region’s second-largest economy, and remains a substantial hydrocarbons producer,” the report reads.
“The lure of the regions’ two largest economies ties in with investors’ motivations for future transactions.”
Asked to identify the most likely key drivers of their future SSA transactions, KPMG said investors cited physical assets/natural resources, growth capital, and attractive valuations.
“Financial investors highlight attractive valuations and growth capital. Notably, 20% of financial investors believed that IP/technology would be the single most important driver of their next deal in SSA,” the report reads.
“In sectoral terms, energy, mining and technology should shape future deal flow. Strategic investors expect the most attractive M&A prospects in SSA over the next two years to emerge in the mining (71%) and oil & gas (51%) sectors.”
Financial investors also told KPMG that they were optimistic about transaction prospects in the mining sector (46 percent) and oil and gas industry (34 percent), respectively.