High borrowing costs threaten Africa's mergers and acquisitions, Standard Chartered warns

High borrowing costs and limited access to flexible financing are threatening mergers and acquisitions across Africa, including Nigeria. Standard Chartered issued this warning in a statement, quoting its Africa Chief Executive Officer and Head of Coverage, Dalu Ajene.

Ajene spoke at a strategic roundtable on scaling acquisition finance in Kigali, Rwanda. He said Africa risks missing a critical phase of industrial expansion unless financial institutions develop more flexible funding solutions.

The slowdown in mergers and acquisitions across the continent reflects a financing gap, not a shortage of business ambition. According to BCG's 2025 M&A Report, Africa's total deal value fell by about 24 percent in the first nine months of 2025 compared with the same period in 2024. Transactions involving African companies declined by nearly 46 percent. Over the same period, global deal value increased by around 10 percent.

Data from DealMakers Africa showed that M&A deal value across Africa, excluding South Africa, fell by 16 percent year-on-year to $4.66 billion in the first half of 2025. Deal volumes dropped by 21 percent.

“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.”

Ajene noted that many African banks rely heavily on traditional lending structures with rigid repayment schedules. These often fail to align with the uneven growth patterns of mid-sized firms. Financing tools such as mezzanine finance, hybrid debt-equity structures, and earn-out mechanisms remain limited across many African markets.

“Such structures are particularly important in a market where offshore private capital has become more selective,” he added.