Growth set to fuel East Africa mergers, acquisitions

Thursday October 28 2021
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KPMG East Africa CEO Josphat Mwaura. The survey by consultancy firm KPMG East Africa shows that majority (82 percent) of the CEOs would make acquisitions over the next three years. FILE PHOTO | NMG

By The EastAfrican

East Africa’s mergers and acquisitions market is headed for a rebound in the next three years, thanks to chief executives of regional companies who have opted for acquisitions in order to grow businesses adversely impacted by the pandemic, according to a new survey.

The survey by consultancy firm KPMG East Africa shows that majority (82 percent) of the CEOs would make acquisitions over the next three years.

“The M&A bounce-back is a reflection of a return to a more normal trading environment, but also due to greater digitisation and customers switching to online platforms to make purchases,” according to the CEO Outlook Survey report that was released last week.

The CEOs believe new partnerships are critical to their digital transformation agenda as they consider diverse growth levers, including strategic alliances with third parties such as data providers.

However, supply chain risks remain a major threat with 74 percent of the respondents noting that their supply chains have been under increasing stress over the past 18 months.

“To support their growth ambitions, 40 percent of the CEOs plan to increase workforces by between six and 10 percent.


‘‘They also agree that Covid-19 affected companies globally,” the survey says.

The CEOs are optimistic about growth globally, across their own countries, within their sectors and companies.

However, certain risks and uncertainties remain including emerging technologies/disruptive technology risk, supply chain and cyber security risks.

Flexi time work

Over the last 12 months, 52 percent of Global CEOs have seen a bounce-back of their businesses, compared with 44 percent of East Africa CEOs.

East African CEOs are strengthening their organisations’ digital advantage for a more flexible future of work and operating as part of digital ecosystems, while recognising that majority of their employees work two or more days remotely and are enabled to work flexibly.

“They (CEOs) are equipping them (staff) with skills and digital tools that allow for hybrid work and foster collaboration,” say the findings.

Also, the Deloitte Africa private Equity Confidence Survey shows that Private Equity investors seeking to buy companies in the East African region within the next 12 months stand to benefit from lower prices.

It shows that asset prices in the region have largely been affected by volatility in the global market and higher discount rates as investors become more risk averse.

From the survey report dated June 2021, attractiveness of the East Africa companies has been affected as most of them are reporting decreased earnings, as they recover from the effects of Covid-19.

 The KPMG EA CEO Outlook Survey notes that fading public trust in governments has shifted focus to organisations to fill the void and regional CEOs see their organisations playing a role in addressing societal challenges such as gender inequality and climate change. 

Despite continued uncertainty and volatility, East Africa CEOs are confident and optimistic about growth, feel a strong connection to their purpose and are looking to drive expansion.