The number of reported corporate deals in East Africa dropped by nearly a fifth in the first seven months of the year compared to the corresponding period in 2023, largely due to reduced activity in Kenya.

Deals data compiled by advisory firm I&M Burbidge Capital shows that the count fell to 73 between January and July from 89 in 2023.

The disclosed value of the transactions fell by 67 percent to $1.06 billion (Sh137 billion), largely reflecting non-disclosure of the value of a large number of transactions.

In Kenya, where the majority of regional transactions are domiciled, the deal count dropped to 48 from 67 in the previous period, with Ethiopia also reporting a drop in deals from seven to two.

Tanzania has been the bright spot this year, reporting nine deals, up from three last year. Uganda’s deals count has gone up by one to eight while Rwanda's has remained unchanged at six. For Kenya, the first quarter of the year saw the shilling weaken to historic lows, partly on account of uncertainty over whether the country would be able to repay a maturing $2 billion sovereign bond.

Inflation was also elevated coming into the new year, but like the shilling exchange rate, it has since moderated after the Central Bank of Kenya (CBK) raised its base lending rate.

I&M Burbidge Capital expects that the macroeconomic conditions will improve going forward, citing Kenya’s falling inflation, prospective rate cuts, and efforts to cut fiscal deficit. In Ethiopia, the company expects the recent easing of foreign currency controls and funding support from the IMF and World Bank to help the economy.

“We maintain a cautiously optimistic view of these and other macro-economic and fiscal policy developments which should pay off in the long run. In the short term, the economies of the region remain challenged dampening business growth including through limited growth in credit to the private sector, and capital investments,” said the advisory firm.

“Tanzania remains a bright spot with established businesses in Kenya looking to their Southern flank for growth through acquisition.”

I&M Burbidge Capital tracks the deals on a monthly basis in the five Eastern African countries, segregating the transactions according to sectors and the type of institutions involved.

In the review period, investments by venture capital firms accounted for the largest share of deals at 29, followed by mergers and acquisitions at 17, private equity investments and exits at 15 and Development Financial Institutions (DFIs) deals at 11.

DFI’s were the most forthcoming in terms of disclosing the value of their deals however, with $667 million (Sh86.2 billion) worth of transactions having their valuations made public.

They were followed by mergers and acquisitions at $168.3 million (Sh21.7 billion), venture capital at $116.2 million (Sh15 billion), and private equity at $110.7 million (Sh114.3 billion).