Fewer merger deals are being done in Africa after a tough few months

South Africa’s recent struggles have slowed down business across the region
South Africa’s recent struggles have slowed down business across the region
Image: Reuters/Siphiwe Sibeko
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With most of the world affected by global economic headwinds tied to a slowing China, there has been a drop in merger and acquisition (M&A) activity globally, according to a report from Mergermarket.

The Africa and the Middle East region was notably affected by the slowdown. For the first time since the first quarter of 2013 the number of M&A deals fell below 100, with just 71 deals done in first quarter of 2016. But while there was a notable drop in the volume of deals the value of the dealmaking held relatively steady with a 1.2% drop in the dollar value to $8.9 billion.

Much of Africa’s struggles are directly linked to the plight of its biggest economies. South Africa, bogged by shoddy government policies and an unstable currency, has seen investor confidence waver after president Jacob Zuma went through three finance ministers within a week at the end of last year.

Nigeria and Angola, both heavily dependent on oil for revenues, have also been hit hard. Both countries have become less attractive as their currencies continue to weaken against the dollar. In Nigeria, investors are especially cautious in reaction to the government’s rigid currency policies.

Globally, in the first quarter of 2016, M&A deals worldwide amounted to $597.4 billion—the lowest total since Q1 2014. The dip in Q1 2016 was particularly stark as the global value of M&A deals in the three preceding quarters topped $1 trillion.