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The surge lifted the country five places from sixth position in H1 last year and marked a reversal of fortunes for Nigeria, which had ranked as Africa’s top M&A market by value four times in the past six years.

The M&A value in Africa’s most populous nation plunged by 88.9 percent to $105.8 million in H1, its lowest level in nearly a decade, even as it recorded the continent’s highest number of transactions.

The contrasting performances highlight a widening gap between deal activity and the amount of capital investors are willing to commit. Kenya recorded 25 deals, compared with Nigeria’s 39, but attracted almost eight times Nigeria’s deal value.

According to the South African-based firm that tracks M&A and corporate finance activity across the continent, Kenya, Nigeria, Egypt and Morocco were the biggest drivers of African deal activity in the first half.

Across the continent, excluding South Africa, M&A value fell 10 percent year-on-year to $5.58 billion, while transaction volumes declined 13 percent to 166 deals.

“Strategic investors continued to pursue long-term growth opportunities despite a more measured global investment environment, but geopolitical developments have heightened uncertainty and prompted buyers and investors to adopt a more cautious approach to transactions in the region,” said Marylou Greig, editor at DealMakers Africa.

Kenya attracts the big bets

Kenya’s strong performance reflects a concentration of large transactions across banking, financial technology and other strategic sectors, as companies and investors position themselves for growth in East Africa.

Banking consolidation, regulatory changes and renewed investor interest in the region have also supported the country’s M&A market in the past two years.

“The country’s M&A market is not in a quiet period,” said Thomas Louis Advocates, a Nairobi-based boutique law firm specialising in fintech, corporate law and digital assets.

In a recent report, the company noted that East Africa’s biggest economy is experiencing one of its most active M&A cycles in a decade, driven by sector-specific consolidation pressures, a wave of foreign capital targeting East Africa and recapitalisation requirements imposed by the Central Bank of Kenya.

Those requirements are forcing smaller banks to make a strategic choice: “grow through acquisition or be acquired,” it added.

The banking sector has consequently emerged as one of the biggest drivers of Kenya’s deal activity.

One of the biggest transactions captured in DealMakers’ H1 data was South Africa’s Nedbank’s proposed acquisition of a 66 percent stake in NCBA Group, valued at about $855 million. DealMakers identified the transaction as the second-largest deal announced on the continent in Q1.

The deal reflects the growing interest of African banking groups in consolidating their positions in high-growth markets, while regulatory and capital requirements are encouraging smaller institutions to seek stronger partners.

Other transactions have reinforced Kenya’s appeal to foreign and regional investors, including KCB Group’s move to acquire a majority stake in fintech firm Riverbank Solutions, strengthening its digital banking capabilities.

Nigeria recorded 39 M&A deals in H1, the highest number in Africa and up from 31 a year earlier. Yet the value of those transactions fell by almost 89 percent to $105.8 million.

The country had ranked first by M&A value in H1 2021, H1 2022, H1 2024 and H1 2025. It fell to ninth this year as investors continued to transact but committed less capital to individual deals.

The result shows that Nigeria’s problem is not a complete loss of investor interest but a shortage of large transactions.

Analysts say several factors are weighing on the market, including global risk aversion, foreign-exchange uncertainty, valuation gaps, election concerns and the new tax regime.

“Part of the reason the M&A market may have shrunk could be connected to global risk-off sentiment, which has pushed investors to become more selective worldwide,” said Abiodun Keripe, managing director of Afrinvest Consulting Limited

He pointed to geopolitical risks, trade tensions, trade wars, uncertainty around global interest rates and still-elevated inflation as factors pushing investors to become more selective about acquisitions globally.

Nigeria’s own FX experience has added another layer of uncertainty.

Episodes of naira volatility and depreciation since 2023 have raised concerns among foreign investors about the ability to repatriate returns and dividends.

Valuation differences between buyers and sellers have also made transactions harder to close, particularly as interest rates, inflation and broader macroeconomic conditions affect the price investors are willing to pay.

“If they cannot find a sweet spot, transactions simply won’t go through,” he said.

The divergence between Kenya and Nigeria signals that global caution alone cannot explain the different performances.

While investors across Africa have become more selective, Kenya has managed to attract several large strategic transactions, particularly in banking and financial services.

Nigeria, by contrast, has seen companies increasingly turn to traditional capital raising, including rights issues, primary placements and public offers, rather than acquisitions.

M&A transactions can also be expensive and time-consuming because of extensive due diligence, advisory costs and uncertainty over the quality of assets being acquired.

The result is a two-speed African M&A market: investors remain willing to deploy capital, but they are concentrating it in markets and transactions where they see clearer strategic value.

Tax adds to Nigeria’s uncertainty

Nigeria’s new Capital Gains Tax regime has added another layer of uncertainty, particularly for private equity investors whose returns depend on eventual exits.

The Nigeria Tax Act, which took effect on January 1, increased the capital gains tax rate for companies from 10 percent to 30 percent.

But analysts caution against blaming the tax for Nigeria’s overall M&A collapse.

“I don’t think capital gains tax was the major factor behind the decline in M&A activity,” said Ayokunle Olubunmi, head of financial institutions ratings at Agusto & Co.

“Private equity contributes to a portion of total M&A activity in Nigeria, but the decline in private equity was not significant enough to explain the scale of the overall drop. So I would see capital gains tax as one of several factors rather than the main driver.”

Still, the tax is influencing how investors think about transactions, particularly their exit strategies.

“One of the things that PE investors have always considered is their exits,” Olubunmi said. “So there is no way you can look at the new capital gains tax without considering its potential impact on those exit decisions.”

The tax can affect deal pricing and structure because sellers may seek higher valuations to compensate for the additional burden, while buyers may be unwilling to pay those prices.

“When this is factored into M&A valuations, the transaction can start to look expensive and lower internal rate of returns,” Olubunmi said.

Africa’s M&A market remains selective

The broader African market is showing a similar pattern of selectivity.

West Africa remained the continent’s busiest region with 55 deals, followed by East Africa with 39 and North Africa with 34. Nigeria led individual countries with 39 deals, followed by Kenya with 25, Egypt with 18 and Morocco with 15.

Yet the biggest transactions continued to be concentrated in sectors such as energy, mining, banking and telecommunications, where strategic investors can justify large capital commitments based on long-term growth opportunities.

DealMakers said upstream energy and mining continued to attract “aggressive and opportunistic buyers”, with major transactions in Angola, Ghana and Equatorial Guinea worth a combined $1.21 billion.

Private equity remained an important source of capital, accounting for 76 transactions in H1, although DealMakers noted that activity has declined from its 2023 level as investors face greater caution and challenges around exits.

For Kenya, the H1 performance shows the benefit of attracting large, strategic transactions even in a cautious global environment.

For Nigeria, the numbers tell a different story: the country still generates the most M&A transactions in Africa, but investors are writing smaller cheques.

That distinction could determine whether Nigeria can reclaim its position at the top of Africa’s M&A market — not simply by increasing the number of transactions, but by restoring investor confidence enough to bring back the big deals.