The number of corporate deals including mergers and acquisitions in the eastern Africa region declined by nearly a third in the first four months of the year compared to a similar period in 2024, largely on account of reduced activity in Kenya which hosts the bulk of regional transactions.
Analysis by advisory firm I&M Burbidge Capital shows that there were 34 disclosed deals in the region this year, down from 48 in the four months to April 2024.
Kenya saw its transactions count fall from 34 last year to 25 this time round, showing that the tough economic conditions and political uncertainty affected investment decisions by businesses and foreign investors.
The country’s gross domesic product (GDP) growth slowed to 4.7 percent last year from 5.7 percent in 2023, while access to credit remained constrained, with annual growth in banks’ lending to the private sector standing at just two percent in the 12 months to May 2025.
Tanzania was the only country among the five analysed by I&M Burbidge Capital to record an increase in the number of deals —rising to five transactions from three in 2024.
Uganda and Rwanda, which had five and four deals respectively in 2024, reported just one and two transactions this year, while Ethiopia reported one transaction, down from two by April 2024.
“Deal activity in East Africa’s capital markets increased in April, with nine transactions (six in March) having been announced…the deal activity in April has brought the year-to-date deal count to 34, reflecting a decrease compared to 48 deals closed during the same period in 2024,” said the advisory firm in its latest East Africa financial review report.
Economic and political conditions usually have a large influence on the ability or willingness of companies to make new investments.
In the period under review, the biggest drop in activity was seen among venture capital (VC) firms, which usually target smaller but riskier startups which have in recent months increasingly folded up due to tough operating conditions.
The number of deals done by VC firms fell by half to 11 from 23 last year, while those carried out by private equity firms grew from seven to 11. At the same time, the number of mergers and acquisitions declined from 10 to seven, and investments by development finance institutions (DFIs) fell from five to four.
This also reflected in the flat growth of foreign direct investments into Kenya, which as per UNCTAD’s annual World Investment Report fell by a marginal 0.07 percent to $1.503 billion (Sh194.32 billion) in 2024 from $1.504 billion (Sh194.45 billion) in 2023.
Looking ahead, I&M Burbidge sees potential for new investment inflows into East Africa arising from the ongoing trade tensions between the US and China, which have seen the latter look to diversify its market options.
The firm added that other global manufacturers and investors are also seeking to hedge geopolitical risks by diversifying supply chains away from China toward more cost-competitive and politically neutral production bases.
This points to potential growth in East Africa’s infrastructure, logistics, and manufacturing sectors, the company said.
