As mergers and acquisitions activity across Africa slows despite an increase in global transactions, Chief Executive Officer and Head of Coverage for Africa at Standard Chartered (StanChart), Dalu Ajene, has called for a major rethink of how African businesses access acquisition finance, warning that the continent risks missing a critical phase of industrial expansion unless financial institutions develop more flexible and scalable funding solutions.
Speaking at the Strategic Roundtable on “Scaling Acquisition Finance to Steady the M&A Downturn” at a pan African forum in Kigali, Rwanda, Ajene noted that the continent’s declining deal activity reflects a financing gap rather than a lack of business ambition.
According to the discussion paper Ajene presented at the roundtable, Africa’s M&A activity has weakened even as global dealmaking shows signs of recovery. BCG’s 2025 M&A Report estimates that Africa’s total deal value fell by approximately 24% in the first nine months of 2025 compared with the same period in 2024, while M&A transactions targeting African companies dropped by nearly 46%. Over the same period, global deal value rose by around 10%, underscoring Africa’s relative underperformance.
DealMakers Africa separately reported that M&A deal value across Africa, excluding South Africa, fell 16% year-on-year to US$4.66 billion in the first half of 2025, with deal volumes down 21%.
“The appetite for growth remains strong among African businesses,” Ajene said. “What is missing are financing instruments that reflect the realities of how African companies expand. Many firms are ready to scale, acquire competitors or deepen regional integration, but the financial architecture to support those ambitions remains underdeveloped,” he stated.
He noted that most African banks still rely heavily on traditional lending structures with rigid repayment schedules that often fail to align with the uneven growth patterns of mid-sized African firms. Flexible financing tools such as mezzanine finance, hybrid debt-equity structures and earn-out mechanisms remain limited across many African markets.
The financing challenge comes despite Africa’s longer-term investment appeal. UN Trade and Development reported that foreign direct investment into Africa rose 75% to a record US$97 billion in 2024, although the increase was concentrated in large project-finance activity and greenfield investment announcements fell 37% to US$113 billion. This divergence highlights the need for more structured financing tools that can convert investor interest into executable corporate transactions.
Ajene, argued that acquisition finance should evolve from a tailored product available only to large corporates into a scalable asset class capable of supporting Africa’s next generation of corporate champions.
“Africa’s M&A slowdown is fundamentally a financing problem, not a demand problem. “There are viable businesses, willing buyers and strategic opportunities across sectors. The challenge is that too many good transactions fail to proceed because the right financing structures are unavailable,” he added.
He also highlighted the importance of stronger partnerships between commercial banks and Development Finance Institutions (DFIs) to improve risk-sharing across acquisition finance facilities. Under such models, commercial banks would provide senior debt, DFIs would support subordinated layers while guarantee mechanisms could help attract additional lenders into the market.
He said such structures are particularly important in a market where offshore private capital has become more selective, local institutional capital remains relatively shallow, and elevated interest rates have made traditional acquisition debt more expensive for mid-market companies.
According to Ajene, this collaborative approach would help reduce concentration risk for lenders while enabling African businesses to access longer-tenure capital better suited to expansion and consolidation.
Beyond financing, he stressed the need for clearer qualification frameworks to help businesses understand what lenders consider “M&A-ready.”
Speaking further, he said “Many African companies have strong potential but lack visibility into the requirements lenders expect around governance, cash-flow predictability and operational resilience,” he said. “By standardising assessment frameworks and increasing transparency, banks and DFIs can significantly expand the pool of eligible borrowers.”
Ajene concluded that reversing Africa’s M&A downturn would require not just more capital but smarter deployment of capital through financing structures designed around African growth realities.
