Nigeria’s M&A value sinks to near-decade low despite posting Africa’s highest number of deals

…deals value falls 89% year-on-year to $105.8m in H1

Nigeria’s Mergers and Acquisitions market recorded its weakest first half in nearly a decade as global risk aversion, foreign exchange uncertainty, election concerns, valuation gaps and a new tax regime made investors more cautious.

Despite the sharp decline in value, the west African nation recorded the highest number of M&A transactions on the continent, with 39 deals in the first six months, up from 31 a year earlier, according to a new report by DealMakers Africa.

The divergence between deal volume and value signals that investors have not abandoned Africa’s most populous nation but are committing less capital to individual transactions, with fewer large deals driving the market.

According to the South African-based firm, which tracks M&A and corporate finance activity across the continent, the country’s H1 deal value of $105.8 million was the lowest since 2018, plunging 88.9 percent from $956.6 million in the same period last year.

It also slipped to ninth place among African markets by deal value, from number one in H1 2025.

Kenya, with 25 transactions, overtook Nigeria as the continent’s leading market by deal value. Nigeria had ranked first in H1 2021, H1 2022, H1 2024 and H1 2025, highlighting the extent of the reversal.

The decline also came against a softer continental backdrop. DealMakers said M&A activity across Africa, excluding South Africa, fell 10 percent year-on-year to $5.58 billion in H1 2026, while transaction volumes declined by about 13 percent to 166 deals.

“Strategic investors continued to pursue long-term growth opportunities despite a more measured global investment environment, but geopolitical developments have heightened uncertainty and prompted buyers and investors to adopt a more cautious approach to transactions in the region,” said Marylou Greig, editor at DealMakers Africa.

Global caution meets Nigeria-specific risks

Analysts say Nigeria’s decline reflects a combination of global and domestic factors rather than a single shock.

“Part of the reason the M&A market may have shrunk could be connected to global risk-off sentiment, which has pushed investors to become more selective worldwide,” said Abiodun Keripe, managing director of Afrinvest Consulting Limited.

He pointed to geopolitical risks, trade tensions, trade wars, uncertainty around global interest rates and still-elevated inflation as factors that have made investors more selective about mergers and acquisitions globally.

Nigeria has also had to contend with its own investment risks, particularly persistent foreign exchange volatility and currency depreciation since the reforms introduced in 2023.

“I think that contributed to the slowdown in the M&A market because investors coming into the country through mergers and acquisitions are also looking at the uncertainty around the repatriation of returns or dividends,” he said.

For foreign investors, uncertainty over the ability to convert and repatriate returns can affect the attractiveness of an acquisition even when the underlying business remains fundamentally strong.

Valuation has become another obstacle.

Keripe said differences between what buyers are willing to pay and what sellers expect to receive can widen because of interest rates, inflation, broader macroeconomic conditions, company-specific factors and the structure of individual transactions.

“If they cannot find a sweet spot, transactions simply won’t go through,” he said.

The weakness in M&A also reflects a possible shift in how Nigerian businesses are financing expansion.

“There also appears to have been a shift towards more traditional capital raising,” Keripe added, pointing to rights issues, primary placements and public offers as alternatives to mergers and acquisitions.

M&A transactions can require lengthy due diligence, significant advisory and transaction costs and considerable time to complete. Buyers must also assess the quality of assets they are acquiring, adding another layer of uncertainty.

“These factors may also have contributed to the decline in M&A activity,” he said.

Capital gains tax adds another layer of uncertainty

Nigeria’s new tax regime has added to the uncertainty surrounding transactions.

Under the Nigeria Tax Act, which took effect on January 1, 2026, the Capital Gains Tax rate for companies increased from 10 percent to 30 percent. The change has raised concerns among Private Equity investors in particular because taxation at exit can materially affect the returns they generate from investments.

Bloomberg reported earlier this year that some Nigerian PE firms had slowed or frozen investments while engaging the government over the impact of the higher capital gains tax.

But analysts caution against attributing the country’s M&A collapse primarily to the tax.

“I don’t think CGT was the major factor behind the decline in M&A activity,” said Ayokunle Olubunmi, head of financial institutions ratings at Agusto & Co. “PE contributes to a portion of total M&A activity in Nigeria, but the decline in that equity was not significant enough to explain the scale of the overall drop. So I would see capital gains tax as one of several factors rather than the main driver.”

The numbers support that caution. PE accounted for $91.7 million of Nigeria’s total M&A value in H1, down from $127.4 million a year earlier but above the $52.5 million recorded in H1 2024.

Olubunmi said the Middle East conflict has also affected capital flows globally, while investors are increasingly considering Nigeria’s 2027 election as they assess the outlook for policy and reforms.

“Investors may want to wait and see whether the incumbent returns and what that means for the policy direction of the country. That uncertainty can also contribute to a slowdown in transactions.”

PE exits become more complicated

Still, the new capital gains tax cannot be ignored, particularly for private equity investors whose returns depend heavily on their eventual exit from portfolio companies.

“One of the things that PE investors have always considered is their exits,” Olubunmi said. “So there is no way you can look at the new capital gains tax without considering its potential impact on those exit decisions.”

The tax can affect both the structure and pricing of transactions because sellers may seek higher valuations to compensate for the additional tax burden, while buyers may be unwilling to pay those prices.

“When this is factored into M&A valuations, the transaction can start to look expensive and lower internal rates of return,” he said.

For international investors, uncertainty around the tax regime could be an additional deterrent.

“If the government is putting its foot down and saying this is the rule, investors can plan around it. But when there is uncertainty about whether the government is reviewing the rules or making changes, it becomes more difficult for investors to plan,” Olubunmi said.

Nigeria remains active, but big-ticket deals are missing

The most striking feature of Nigeria’s first-half performance is therefore not the disappearance of M&A activity, but the collapse in the value of transactions.

Africa’s third largest economy recorded 39 deals, the highest number on the continent, but its $105.8 million in total value was far below that of several markets with fewer transactions.

West Africa remained Africa’s most active region, accounting for 55 deals, followed by East Africa with 39 and North Africa with 34. Nigeria, Kenya, Egypt and Morocco were the biggest contributors to activity.

Across the continent, private equity also remained important, accounting for 76 transactions in H1, although DealMakers said the decline in PE deal numbers since 2023 reflects both investor caution and difficulties around investment exits.

For Nigeria, the challenge is whether the current slowdown is temporary or signals a deeper shift in how investors allocate capital.

The country still has strong structural attractions, including its large consumer market, financial sector, energy resources and long-term growth potential. But investors are now weighing those opportunities against currency risks, political uncertainty, higher transaction costs and the changing tax environment.

The result is a market where investors are still willing to do deals, but appear increasingly reluctant to write large cheques.

That may be the clearest explanation for Nigeria’s H1 M&A performance: the appetite for Nigeria has not disappeared, but the size and confidence of the bets have weakened.

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