Merger and acquisition (M&A) activity continues to be strong in key African jurisdictions and is resurging in others after a challenging 2020 and early 2021. All signs during the first quarter of this year are pointing to a brisk period of dealmaking in the coming months, says law firm Bowmans.

With economies reopening after the Covid-19 standstill, African countries are generally eager to attract inward investment.

However, recent sanctions against Russia, its banks and oligarchs are having far-reaching consequences, resulting in an element of uncertainty in global markets. This is likely to impact M&A and private equity, particularly in those jurisdictions and for those global corporates most reliant on Russia for the provision of services or that have Russian ties.

It remains to be seen how this will play out in M&A across Africa since exposure is complex and not yet fully quantifiable, the law firm says.

The company's M&A activity report covers eight countries – Ethiopia, Kenya, Mauritius, Nigeria, South Africa, Tanzania, Uganda and Zambia – and is focused on key sectors with active M&A dealmaking and predicted M&A in the coming months.

Bowmans notes that the South African economy has exceeded growth expectations post-pandemic.

"Notwithstanding unrest in 2021, the latter part of last year saw an uptick in foreign investment. This was driven by attractive valuations, the weak rand and upside potential.

"This trend, coupled with the relaxation of pandemic-related restrictions, low interest rates, the strong balance sheets of South African corporates, a government and regulatory framework that is enabling in certain respects and the boost to commodity prices from Chinese economic stimulus, is continuing to bolster current deal activity (local and foreign)," the first highlights.

It adds that decarbonisation of the energy sector as a result of efforts to ensure regulatory compliance is likely to place environmental, social and governance considerations at the forefront of public sector investment in South Africa.

The delisting of several companies from the JSE is also expected to be a catalyst for companies looking to access equity capital markets through new listings.

The African Continental Free Trade Area agreement is also expected to have a positive impact on investment, Bowmans points out.