Finance & Investment

Mergers & Acquisitions: Why Should You be Looking at Kenya?

Merger and acquisitions across the world happen as firms look to create synergy from collaborating while eliminating competition and diversifying their outreach at times. It is the main driver of economic activity given the magnitude of the players involved as well. However, M&A activity in Africa has suffered a huge drop off as Reuters analysis attributes this to political uncertainty and corruption as major players in the continent enter election campaigning season which requires corporations to take a look at what is happening regarding their governance. Sanlam Ltd’s buyout of Moroccan company Saham Finances SA for $1.1 billion currently stands as one of the few highlights of the calendar year in that scene.

If you are looking at a platform for M&A and investment activity, Kenya’s agriculture sector has been boosted by a technology-driven boost and is on the verge of dominating the African markets with a system that has been made more accessible and efficient for those who currently operate within it. Per the UN Food and Agriculture Organization, Kenya’s agriculture sector contributes to roughly 53 percent of their GDP (half of it directly, the other half indirectly through linkages with other sectors such as manufacturing). Having a majority of their economic activity go through it, having a share in this sector opens entry into a market that accounts for roughly 65 percent of the country’s exports is a move that creates a ticket to global markets through a low-risk market given the weather conditions making it sustainable for the sector.

The support that this sector receives from other sectors within the country, allowing these other sectors to thrive in the process, has been overwhelming and only speaks more magnitudes to the high performance that this sector guarantees. M-Pesa, a mobile money transfer service, has been used for digital banking among local farmers to make payments more convenient for them. This platform has made technology more accessible (more than 70% of the population own a mobile phone!!) to even the most remote of regions in the country. With the system now freely flowing after its introduction in 2007 and backed by a select group of top commercial banks, the sky is limit as more agriculture is only going to result in more payments which means more economic activity and better performance for banks and technology industries that create this platform.

Not taking advantage of Kenya’s rise in this industry could be costly. Foreign attention has already been brought to it especially given Kenya’s status as a regular top-ten in the world in mobile transactions year after year. It’s only a matter of time before the growth of other sectors from agriculture see it overtake Nigeria and South Africa as Africa’s rightful giant.

 

Author: Nnamdi Amangbo

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