Africa’s corporate merger and acquisition (M&A) activity has taken a sharp downturn, with deal volumes plunging 21 percent in the first half of 2025.

The decline reflects a broader retreat by foreign investors from the continent’s private equity (PE) markets, driven by rising global interest rates, a strong US dollar and mounting political and economic uncertainty across key African economies.“For Africa, where private equity funds remain heavily reliant on offshore capital, this has translated into weaker fundraising and more selective capital deployment,” South Africa’s Deal Makers Africa (Q2 2025) report states.

The report shows that the total value of M&A deals captured across Africa (excluding South Africa) during the six months ending June fell by 16 percent to $4.66 billion, down from $5.52 billion in the same period last year, and 61 percent below the levels recorded in H1 2022 ($11.93 billion). Deal volumes dropped by 21 percent, from 220 to 174 deals, and were 55 percent lower than the 391 deals registered in H1 2022.

Two energy sector deals topped the continent’s M&A list by value, totalling $2.16 billion—nearly half of Africa’s total deal value during the review period.

Of the 174 M&A deals, only 75, valued at $341 million, were PE transactions. In comparison, the same period in 2024 saw 121 PE deals valued at $554 million out of a total of 220 deals.

The report highlights that all M&A deals during the period were executed solely by local investors.

Currency volatility, energy insecurity and political instability in key economies such as Nigeria have further deterred foreign investors.“African institutional capital remains underdeveloped, with African GPs [general partners] heavily reliant on foreign backers. Subdued IPO [initial public offering] markets, coupled with limited trade buyer activity, continue to constrain exit opportunities—a critical factor in investor appetite,” the report notes.

It adds that the correction in technology and fintech valuations—sectors that fuelled the 2022 surge—has also contributed to the slowdown.

“Analysis of private equity investment in Africa over the past four years mirrors this steady decline, amid challenges brought about by a mix of global macro pressures, regional risks and shifts in investor strategy,” the report adds.

However, it also emphasises that Africa’s long-term investment story remains intact. The continent’s demographic dividend, rapid urbanisation and urgent need for investment in energy transition, infrastructure and healthcare continue to present opportunities.“All that is needed is patient capital, and Africa’s fundamentals will ensure it remains firmly on the radar, with the current environment presenting entry points at more attractive valuations,” the report concludes.

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