Africa’s population boom is one of the great secular trends in Europe, the Middle East and Africa (EMEA), and is likely to act as a catalyst for deal-making activity for many years, with a particular emphasis on technology.

“The growing youth population in Africa is going to continue driving deal activity in certain sectors,” according to Sanjay Kassen, joint head of the Corporate Commercial practice at ENS, Africa’s largest law firm, adding that one direct implication of the trend will greater adoption of new technologies across the continent, which will drive deal activity.

Insufficient or deteriorating infrastructure will provide opportunities for entrepreneurs, investors and dealmakers in mobile-based internet offerings, artificial intelligence, satellite connectivity and data storage and protection in particular, Kassen said.

Although overall volumes have been modest so far, African tech had an above-average year for deals in 2021 as the pandemic concentrated minds, Mergermarket data shows. Total volumes were EUR 34.3bn across 63 deals, while volumes fell back in 2022 and 2023.

There are already signs that 2024 could be a great year for African technology deals, though. On 1 February, MNT-Halan, an Egypt-based fintech company, announced that it had secured USD 200m in equity funding from Chimera Abu Dhabi for a 20% stake. It is in talks to raise another USD 60m in investment from international investors.

One in four

In September 2023, the International Monetary Fund (IMF) said that Africa’s population is projected to reach close to 2.5bn by 2050.

By that time, around one in four of the world’s population will be African, a number that could reach 40% by the end of the century. The working-age population of Africa is expected to grow faster than other age groups.

By contrast, Africa’s population was estimated to be around 140m (9% of the world population) in 1900. Since then, it has increased tenfold and now stands at around 1.4bn (17.5%).

African unicorns

Opportunities are ripe for African entrepreneurs and venture capital (VC) investors right now, Kassen said.

In the longer term, there will also be exciting opportunities for private equity (PE) investors as the continent’s unicorns and soonicorns outgrow the VC world. Dealmakers can use Mergermarket’s Likely VC Exit predictive algorithm to track potential consolidators and PE platform plays.

Scroll, a Seychelles-based company which was founded in 2021 and is creating an inclusive ecosystem for Ethereum, has a score of 22 out of 100, according to the Likely VC Exit algorithm. It raised USD 50m last year.

Meanwhile, Nigerian e-commerce company Sabi has a Likely VC Exit score of 20 after raising USD 38m in a Series B round last year. And Cellulant, a Kenyan-based payments company, has a score of 16. It raised USD 40m in 2022.

Non-African dealmakers who want to get involved have a great opportunity to take advantage of the secular trend. However, Africa’s capital markets are less sophisticated than elsewhere, which brings risks as well as opportunities, Kassen said.

“Cultural differences and nuances also mean that dealmakers need to learn and understand African cultures to do deals in local markets,” Kassen also said.

If this is truly going to be the African century, shouldn’t all dealmakers in EMEA be thinking about these issues today?

*Mergermarket’s Likely VC Exit predictive analytics assign a score to VC-backed companies to help track and predict when an exit could occur through M&A, an IPO, a direct listing or a deSPAC transaction.