Economy
Mergers, Acquisitions Activity Drops Sharply in Africa in H1 2018—Report
By Modupe Gbadeyanka
An analysis by Baker McKenzie of Thomson Reuters M&A data for Africa has revealed that in the first half of 2018, the total deal volumes and values of Merger & Acquisition (M&A) transactions in Africa fell sharply by 44 percent in deal volume and 57 percent in aggregate value, compared with the first half of 2017.
The report noted that there were 485 deals valued at $19.420 million in the first half of 2017, this dropped to 270 deals valued at $8.318 million in H1 2018.
On a positive note, intraregional cross-border deals rose twofold in terms of aggregate value from $418 million in the first half of 2017 to $1.292 million in H1 2018.
Managing Partner and Head of the Corporate/M&A Practice at Baker McKenzie in Johannesburg, Mr Morne van der Merwe, in an emailed statement made available to Business Post on Thursday, explained that, “Africa is a continent with 54 different countries, all with different economies and so it is difficult to pin down specifically what has caused the downturn in M&A activity in the first half of the year.
“Generally, inbound investment in Africa has been affected by political uncertainty and unpredictability – business does not mind challenge but has no affinity for uncertainty.
“Corruption and bad governance, as well as the strict anti-bribery and anti-corruption laws in some investor countries, such as the United States and the United Kingdom, has made investors more cautious.”
Intraregional trade
“Despite the downturn in M&A transactions, it appears that regional economies are developing and intraregional trade is doing well. East Africa is developing a strong regional focus and had almost left the Southern African region behind, although this region has come back onto the radar of late,” Mr van der Merwe noted.
He explained further that certain economies such as Ethiopia are becoming more of a discussion point as popular investor destinations in Africa because of interesting development initiatives taking place in this country.
The majority of the intraregional deals in Africa were in the High Technology Sector (cutting edge or advanced technology) which accounted for 21 percent of all deals. Interregional dealmaking value was highest in the financial sector which made up 82 percent of the total value.
There were four High Technology intraregional deals in Africa in the first half of 2018. Intraregional deals in the financial sector in H1 2018 were worth $1.056 million.
Mr Van der Merwe disclosed that the financial services sector, especially banks and insurance companies have been deploying various models for their expansion into Africa, including regionally focused strategies.
“Lessons I have picked up from these markets include that having the right local partner remains key to being successful in Africa and that it is important it to think twice before you impose your brand on a market where you have recently made an acquisition.
“This is because you may change the recently acquired company from what had made it successful in the first place. Keeping the local brand and management in place has worked very well for some in the financial services sector who have expanded into Africa,” he noted.
Mr Van der Merwe explained that events such as Barclays withdrawing from Africa had left many wondering how a financial giant like Absa would rethink its strategy and possible expansion into Africa, and it will be interesting to follow the unfolding of their strategy to position themselves as an African Bank.
“I think that expanding into the continent and having a regional approach as part of that expansion is something they are most likely thinking about very carefully,” he said.
He noted that the growth in investment in both the financial services sector and the technology sector in Africa are interlinked. Financial services organisations are becoming more dependent on investment in technology and innovation as they look to upgrade their IT systems and find news way to grow their customer bases.
Inbound
In terms of inbound cross-border transactions with other regions, Industrials was the most popular by deal volume (16 percent share of the total) with 16 deals completed in the first half of the year. Energy & Power attracted the highest share of aggregate deal value (35 percent of the total value), with deals valued at $1.493 million.
“The industrials sector is a focus area for many developing economies across the continent and the sector is well established, leading to many more opportunities than one would find in less well established sectors,” he said.
Mr Van der Merwe explained also that the extent of the power deficit in Africa is well known and increasing electricity generation, whether on-grid or off-grid, across the continent is the focus of a number of initiatives, all of which are driving investment.
In terms of foreign investors, the United States (US) was the most acquisitive in Africa, representing 18 percent of deal volume and 39 percent of deal value. The US completed 18 deals in Africa in H1 2018, worth $1.694 million.
“The US has been a significant investor in the African continent for some time. Trump’s policies have played out well for certain countries in Africa and the relationship between the US and Africa is very much focused on strategic bilateral relationships influencing the direction of investment flow,” he noted.
Outbound
In terms of outbound deals, High Technology had the highest volume of outbound interregional cross-border deals (13 percent of total deals). There were eight outbound deals in the High Technology sector in the first half of the year. Real Estate accounted for the highest share in aggregate value at 27 percent of total value of outbound deals. This sector completed $430 million worth of deals in H1 2018.
“The high number of outbound technology deals from Africa is because African tech companies are targeting offshore investments in companies that will deepen their access to new technologies, markets and talent,” he said.
The real estate sector attains prominence because of relative value of real estate as an asset class.
“As economies develop, so does real the estate sector. For example, the expanding middle class and consumerism in Africa has led to a growth in the consumer goods sector and real estate development is part of that as new shopping centres are developed.
“Also, African infrastructure development is high on the agenda across the continent and there is a big real estate element associated with that as well,” he explained.
The UK had the highest number of investors from Africa during the period H1 2018 (20 percent share), with 12 deals being completed in the first half of the year. India was the most attractive market in terms of value (46 percent of total value). African dealmakers completed transactions worth $735 million in India in H1 2018.
“The ease of doing business with the UK brought about by various factors, including, time zones, easy access, language, historical ties and familiarity has meant that investment between the UK and numerous African countries has always been good. Brexit has impacted positively on investment in that it has caused UK trade outreach initiatives to various historic trade partners,” Mr van der Merwe explained.
“With regards to India being a popular investment destination for African businesses to invest, this is because like Africa, India is a developing economy. African investors are astute in seeking out opportunities in these economies because the environment and challenges are often similar, or at least comparable.
“This makes it easier to build a relationship with local partners, which is so necessary for successful investment.
“India is also a very large economy and so huge opportunities can be accessed for investors who know where to look.
“In addition, historical ties between India and many countries in Africa adds to the familiarity and relative ease of doing business,” he added.
By Aduragbemi Omiyale
The Stanbic IBTC Bank Nigeria Purchasing Managers’ Index (PMI) for the Nigerian private sector in July 2026 contracted to 52.5 points from 53.4 points in June 2026, a statement made available to Business Post has shown.
This occurred despite the business environment sustaining its growth last month, with an increase in new orders experienced, as inflationary pressures softened, and output and employment modestly rising.
The Head of Equity Research West Africa at Stanbic IBTC Bank, Mr Muyiwa Oni, said the PMI indicated that the private sector recorded its slowest since March 2026, as businesses also increased their input purchasing activity to keep up with current demand requirements and prepare for future workloads.
“Nigerian businesses reported improved customer demand in July while better pricing and new product launches also helped them to capture new orders arising from the increase in demand. These factors helped to keep the private sector activity in an expansionary territory, although this moderated when compared to June,” he was quoted as saying.
It was stated that while input costs increased at their slowest pace in five months, panellists reported higher costs for fuel and raw materials. Selling prices also softened in line with the picture for input costs in July.
Headline inflation eased slightly to 15.91 per cent y/y in June from 15.93 per cent y/y in May, snapping three consecutive months of price increases.
Although July inflation is likely to be higher m/m, it is expected to print lower, likely at 15.72 per cent y/y, primarily driven by favourable base effects from the corresponding period of last year, because there are no expectations of the magnitude of m/m inflation witnessed in July 2025 (1.99 per cent) to materialise this year.
“We retain our 2026 growth forecasts at 4.1 per cent as we see the oil sector growing by 3.45 per cent y/y in 2026, from 8.50 per cent y/y in 2025, while the non-oil sector is likely to grow by 4.11 per cent y/y, from 3.71 per cent y/y in 2025.
“The risks to our outlook include country-wide insecurity which may constrain food production, exchange rate pressures resurfacing, extreme-weather related conditions and higher fertiliser prices impacting crop yield, and a volatile global environment which may affect sentiment and constrain capital flows,” Mr Oni noted.
By Adedapo Adesanya
Sahara Upstream, a Nigeria-focused crude producer, has deployed a new 380,000-barrel tanker to boost exports from the OML 18 block as part of a wider push by domestic operators to invest in infrastructure and lift output and exports for Africa’s biggest oil producer.
The MT D Adesanya, which can hold more than 62,000 cubic metres of crude, will operate alongside the MT D Bayero, receiving crude from shuttle vessels at Bonny Anchorage, one of Nigeria’s main crude export hubs, before transferring it to the FSO Cawthorne storage facility.
Sahara said the tanker would help cut turnaround times, currently about 30 to 48 hours, and support a planned 50 per cent increase in exports from the block’s current level of about 950,000 barrels per month.
The block currently produces about 36,000 barrels per day, according to data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), with Sahara targeting output of 60,000 barrels per day.
OML 18 is one of the Niger Delta’s oldest producing assets. It began production in 1970 and contains an estimated 1.5 billion barrels of oil equivalent in reserves.
Shell, Total and Eni sold their combined interests to Eroton in 2015 as part of a broader shift toward domestic ownership in Nigeria’s upstream sector.
This development comes as Sahara Upstream is deepening its exploration and production footprint through Asharami Energy Limited (AEL), its upstream E&P business, which says it is targeting 350,000 barrels of oil per day by 2030 through its subsidiary, Enageed Resources Limited (ERL).
The growth target comes as AEL also marks a major safety milestone, achieving 6 million Lost Time Injury (LTI)-free man-hours in its OML-148 operations — reinforcing the company’s commitment to operational excellence and safety leadership.
According to Asharami Energy, the milestone reflects its ability to execute complex operations safely, in line with Sahara’s Beyond XXX vision, which builds on the group’s 30-year legacy of responsible enterprise while marking its next chapter of impact, innovation, and sustainable growth.
The developments position Sahara Upstream and its subsidiaries among the domestic operators driving increased investment in Nigeria’s oil and gas infrastructure, as the group works to scale up production and exports for Africa’s biggest oil producer.
By Aduragbemi Omiyale
One of the leading energy firms in Nigeria, Aradel Holdings Plc, has expressed its desire to optimise its enlarged portfolio and improve operational efficiency in the second half of 2026.
The company is planning to build on the success it recorded in the first half of the year, where it grew its revenue by 577 per cent to N2.5 trillion from N368.1 billion in H1 2025.
The significant rise in earnings was driven by higher production volumes together with stronger realised crude oil and gas prices, with the average at $90.4/bbl and $2.08/mmscf, respectively.
In the period under review, the Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) increased by 688 per cent to N1.4 trillion from N176.4 billion in the corresponding period of last year, while the operating profit surged by 789 per cent to N1.1 trillion from N118.6 billion due to higher revenue and crude handling income at N149.8 billion, partly offset by underlift cost and general and administrative costs.
The net cash generated from operations was N975.6 billion between January and June 2026 versus N140.8 billion in the same period of 2025, reflecting the cash generation of the enlarged organisation.
The net debt contracted by 70 per cent on a year-to-date basis to N46.5 billion from N475.1 billion as of December 31, 2025.
Aradel, in the period under consideration, improved its post-tax profit by 30 per cent to N191.0 billion from N146.4 billion, a development that impressed its chief executive, Mr Adegbite Falade, who said, “A firmer price environment supported performance, generating net cash from operating activities of N975.6 billion and a closing cash balance of N1.7 trillion.”
“Our enlarged portfolio provides more opportunities to generate stronger cash flow and returns for shareholders and unlocking that potential is our main focus.
“We reaffirm our full year production guidance of 110 – 140 kboepd and remain committed to operating responsibly in a changing energy landscape and to delivering lasting value for our stakeholders,” he stated.
