Cross-border mergers are among the factors driving foreign direct investment (FDI) into the Common Market for Eastern and Southern Africa (COMESA) economic bloc, an official said on Tuesday.
Willard Mwemba, head of mergers and acquisitions of COMESA Competition Commission, told a regional forum in Nairobi that more than 220 transactions have been notified to the regional watchdog agency between 2013 and July 2019.
“The mergers are signals of the increasing attractiveness of the region as an investment destination, both within and outside COMESA,” Mwemba told a COMESA Competition Commission media workshop.
The 21-member trading bloc has seen a drop in greenfield investments in recent years and the most common form of investment now is through mergers, he said.
There is empirical evidence that transnational corporations are more likely to invest in a country where there is a robust competition law because they ensure a level playing field and certainty, Mwemba said.
“A good and robust competition law and its constituent merger control regime is instrumental to attracting FDI,” he said.
Cross-border mergers and acquisitions sharply increased over the last two decades, partly as a result of financial liberalization policies, government policies and regional agreements, Mwemba said.
There has been a shift of merger and acquisition activities from traditional sectors such as construction to emerging sectors such as energy, banking and financial services and information and communications technology (ICT), he noted. Enditem