Predictions in African Markets for 2025

Andrew Bahlmann, CEO of Deal Leaders International, reveals six key trends reshaping Africa's M&A landscape in 2025, from cross-border activity to ESG-driven deals and a fintech boom.

Highlights:

• Global and regional investors are drawn to Africa’s growing economies, particularly in tech, natural resources, and consumer goods.
  
  
• Digital transformation is fueling M&A, with fintech leading the charge in financial inclusion and innovation.
  
  
• Sustainability is a big focus, with renewable energy and ESG principles driving acquisitions in key sectors.

The local landscape for mergers and acquisitions (M&A) is poised for significant transformation in the coming years, particularly within emerging African markets. With increasing economic growth, a rising middle class and an evolving regulatory environment, Africa’s economies are attracting substantial attention from global investors.

I expect six key trends to shape the M&A space in 2025 as Africa emerges as a growing hub for deal-making:

• As the larger African economies continue to develop, cross-border M&A activity can be expected to surge, driven by the quest for new growth opportunities. Global investors, particularly from Asia, Europe, the Middle East and SA, will increasingly look towards Africa’s untapped potential in sectors such as technology, natural resources and consumer goods.
  
  Increasing levels of intracontinental trade through initiatives such as the African Continental Free Trade Area (AfCFTA) will begin to facilitate a more seamless flow of capital across borders by removing tariffs and reducing non-tariff barriers. It will take time, but by creating a more interconnected regional market it will likely foster greater collaboration and, in turn, M&A activity between African nations.
  
  
• I anticipate that digital transformation will be one of the main drivers of activity in Africa. The continent is seeing rapid growth in mobile and internet penetration, and SA technology companies are at the forefront of the region’s economic expansion. Investors will focus on acquiring companies with strong digital capabilities, from e-commerce platforms to fintech and artificial intelligence.
  
  Tech M&A deals in Africa have already gained significant momentum. In the coming years fintech in particular will be one of the most attractive sectors, as financial inclusion remains a critical priority across the continent. The growth of mobile money, online banking services and digital lending platforms will make the African fintech space a prime target for both regional and global investors.
  
  A notable example of a technology-driven M&A deal is the acquisition of leading SA e-commerce company Takealot by Naspers and its subsidiary Prosus. The deal, which saw Naspers consolidate its investments in e-commerce and technology, reflects the growing interest in Africa’s burgeoning tech sector. In 2025 I expect this trend to intensify with even larger global players entering the market.
  
  
• EU regulations mean environmental, social & governance (ESG) considerations will arrive in SA in a big way in the coming year. They are becoming increasingly important in M&A decision-making globally, and Africa will be no exception. Africa’s vast natural resources will be a target in M&A activity and sustainability factors will have to be core to any deal. Investors will look to acquire companies that align with their own ESG principles, particularly in sectors like renewable energy, agriculture and waste management — and African companies should prepare themselves to align if they wish to participate in the global economy.
  
  With abundant natural resources like solar energy and wind, Africa is positioning itself as a leader in the renewable energy space. By 2025 companies focused on solar, wind and geothermal power are expected to see an influx of acquisitions from global and regional investors seeking to tap into the green energy revolution.
  
  A notable recent M&A deal in Africa’s renewable energy sector was Engie’s acquisition of Lekela Power, a renewable energy company with a portfolio of wind and solar projects across Africa.
  
  
• Private equity (PE) and sovereign wealth funds (SWFs) are expected to play an increasingly prominent role in M&A transactions in Africa. These investors are increasingly interested in sectors such as infrastructure, healthcare and agribusiness, where Africa presents significant growth potential. These investors will focus on consolidation in fragmented sectors, particularly in countries with rapidly developing economies like Nigeria, Kenya and SA. For instance, Helios Investment Partners, one of Africa’s largest private equity firms, played a major role in the telecommunications sector by backing IHS Towers, one of Africa’s largest telecom tower operators.
  
  
• The Covid-19 pandemic highlighted the critical importance of healthcare infrastructure, particularly in emerging markets. Africa, with its underdeveloped pharmaceutical industry, is expected to attract more M&A activity in the healthcare sector. Pharmaceutical companies, medical technology firms and healthcare providers will be targeted for acquisitions as part of a broader strategy to improve public health and tap into a growing market.
  
  For instance, in 2016 Mylan, a global pharmaceutical giant, acquired Meda, a Swedish pharmaceutical company that had a significant presence in Africa. The deal was a strategic move to strengthen Mylan’s position in emerging markets, including Africa.
  
  
• Regulatory changes will also shape the M&A landscape in emerging markets. Governments in Africa are increasingly enacting policies that encourage M&A in specific sectors, such as agriculture, mining and energy. Additionally, regulatory bodies (other than SA to date) are working to streamline approval processes for deals, making it easier for both domestic and foreign investors to complete transactions.
  
  During 2013-2014 a key example of government-driven M&A in Africa was Nigeria’s sale of its power assets, part of the country’s broader privatisation efforts. The sale of these assets, including electricity distribution and generation companies, attracted significant investment from both local and international players. Similar government-led initiatives in countries like SA will likely drive M&A activity across various sectors.

As we enter 2025 Africa will undoubtedly be at the centre of a significant wave of M&A in emerging markets.

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