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Kenya drives East Africa’s corporate deals in an election year

THE 2022 political campaigns in Kenya focused less on personalities and ethnicity as leaders moved to woo voters by promising them economic reforms.

As a result, election season passed relatively quiet, with a peaceful transition of power in the region’s largest economy.

This appears to have had a positive impact on investor confidence as investment flows and corporate deals in form of mergers and acquisitions into the country surged.

Advisory firm, I&M Burbidge Capital in its latest deals analysis shows 91 deals valued at US$1.1 billion were recorded in East Africa over the last eight months with Kenya controlling 68 of these deals.

In August – the month that Kenyans cast their votes – the country recorded eight deals out of a total of 11 regional deals with a disclosed value of US $35 million. The remaining three went to Uganda.

“Despite the relatively quiet operating environment in Kenya, as a result of the General Elections and subsequent Supreme Court Appeal, Kenya once again took the lion’s share of deals,” said the firm in their East Africa financial review report for August.

Uganda had the second-largest number of deals over the eight months, at 15, followed by Tanzania and Rwanda at five and three deals respectively.

Funding to startups and small businesses had the most deals (39) and IT (33) and financial services (18) sectors were the most vibrant in the region, with the highest number of deals and values.

“These transactions underline the continued emergence of the IT sector, backed by the wave of venture capital investments, in East Africa,” said I&M Burbidge Capital

Other sectors with numerous deals included healthcare, energy and logistics, with six deals each, while manufacturing and agribusiness tied with five deals each.

Comparative data by the Big Deal database points to the surging venture funding in East Africa.

The funding secured by Kenyan startups is almost double the US$ 411 million raised last year, buoyed by two mega deals valued at more than US$ 100 million.

In May, giant solar firm, Sun King, raised US $260 million in series D funding to expand the delivery of off-grid energy technologies in Africa and Asia.

In March, B2B retail and e-commerce platform, Wasoko – which has since relocated to Zanzibar – raised US$ 125 million in Series B funding.

Over the last eight months, private equity and development finance had 31 deals, while mergers and acquisitions had 15.

While the upward trajectory is expected to continue this may still shift due to changes in government tax policies including an amendment to the excise duty rates in Kenya, increases in global interest rates and increasing costs of production fuelled by the rapid increase in petroleum and oil prices

Similarly, the continued appreciation of the US dollar against regional currencies, together with Zanzibar’s recent moves to establish a tech valley could both impact on number and movement of deals in the region.

“We are optimistic for continued robust transactions and an improved economic environment, following the completion of the General Elections in Kenya,” said I&M Burbidge Capital analysts.