Nigerian firms are revving up investments across Africa, with investors backed by Aliko Dangote, the continent’s richest man, the latest to make inroads into new markets.
Alterra Capital Partners, a private equity firm supported by Dangote, is in advanced talks to acquire a majority stake in Java House, one of East Africa’s largest coffee chains, in a deal valued at over US$100 million.
The deal, pending approval from the COMESA Competition Commission, is another sign of a growing appetite among Nigerian businesses for cross-border expansion.
Java has been the go-to spot for Nairobi’s caffeine-fueled catch-ups throughout the noughties, serving up lattes and boardroom deals with equal ease.
Once completed, a Java House deal would mark a strategic shift for the Dangote Group, which has traditionally focused on heavy manufacturing industries.
Currently, Dangote Group operates in 17 African countries and has interests spanning cement production, agriculture, food, and energy. The launch of their US$20 billion refinery project in the Lekki Free Zone near Lagos in 2023 is expected to upend the West African oil market and could significantly reduce dependency on imported fuel in the region significantly.
Dangote’s Java buyout follows close on the heels of a wave of expansion by Nigerian companies beyond their home market, with firms in banking, consumer goods, and fintech deepening their presence in African economies.
Access Bank, Nigeria’s biggest lender, announced in December last year it was finalising a deal to acquire 100% of South Africa’s Bidvest Bank.
The lender’s acquisition spree has expanded further into Kenya and Mozambique.
Flutterwave, one of Africa’s most valuable fintech companies, is also ramping up an expansion drive across Africa. The Lagos-based payments giant faced legal hiccups launching in Kenya, but with those resolved, it is now preparing to expand into Ethiopia, pending regulatory approvals.
Flutterwave’s growth reflects Nigeria’s fintech boom, which has seen companies like Interswitch and Paystack extend their reach across the continent. These firms are driving financial inclusion and facilitating cross-border trade, a key pillar of the African Continental Free Trade Area (AfCFTA).
Moniepoint, another rising player in Nigeria’s digital banking space, is also scaling its operations across the continent after securing US$110 million in fresh capital last October.
The capital infusion elevated Moniepoint to “unicorn” status, meaning its valuation exceeded US$1 billion. The funds are earmarked to enhance digital payment infrastructures and banking solutions across Africa, aligning with the continent’s rapid adoption of fintech innovations.
The company, which provides payment and banking services to small and medium-sized enterprises (SMEs), is exploring opportunities in West and East Africa, aiming to replicate its success in Nigeria, where it processes billions of dollars in transactions annually.
These developments occur against a backdrop of African companies increasingly expanding their operations across the continent.
Leading businesses are integrating the region, leveraging the world’s fastest-growing middle class and minimal formal competition. McKinsey notes that “the real resource in Africa is its people”, and companies expanding into Africa are poised to capitalise on this demographic dividend.
“Africa will shortly be home to the world’s largest working age population and a burgeoning consumer class,” McKinsey said in its “There is no ‘one Africa’” report in 2023.
While Nigerian firms look for opportunities across the continent, the country’s banks have for long been among the most ubiquitous forces in pan-African investment. United Bank for Africa (UBA) operates in 20 African countries and derives a significant portion of its revenue from subsidiaries outside Nigeria.
Guaranty Trust Bank (GTBank), now operating as GTCO, has also established a strong presence across the continent, with subsidiaries in Kenya, Rwanda, and Ghana. Its innovative approach to digital banking has set a benchmark for the industry.
Beyond banking and fintech, Nigerian firms are making significant inroads into energy and retail. Seplat Energy, a leading indigenous oil and gas company, is actively pursuing acquisitions in Angola and Mozambique to bolster its upstream operations.
Meanwhile, the Tolaram Group, the Nigerian conglomerate behind the Indomie noodles brand, has successfully expanded its consumer goods empire across Africa, with a strong presence in Ghana, Senegal, and South Africa.
For Alterra, the acquisition of Java House marks another chapter in the restaurant chain’s shifting ownership.
Originally founded in 1999, and as an early mover in the East African market long synomymous with “let’s meet for a coffee” in the region’s busiest cities, the Java House brand has passed through several investors, from Emerging Capital Partners to Dubai’s Abraaj Group and later Actis, following Abraaj’s collapse.
According to the African Investment Report 2022, Nigerian firms accounted for over 20% of intra-African foreign direct investment (FDI) flows in the past five years, second only to South Africa. This trend is expected to accelerate as African economies recover from the COVID-19 pandemic and the AfCFTA gains traction.
The trend will further continue, driven by a combination of market saturation at home, the pursuit of new growth opportunities, and the desire to play a pivotal role in Africa’s economic integration.
As these companies expand, they also contribute to job creation, infrastructure development, and the overall economic dynamism of the continent.
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