Changes in African nations' political spheres have given investors confidence. ENS' Scott Nelson reports

Heralding in another year, it is always interesting to consider both the 12 months that we leave behind us, as well as what may be in store for the months that lie ahead. Last year was one of significant activity on the continent, not just in relation to M&A, private equity and corporate finance, but also in the lives of millions of Africans who have experienced momentous transformation in their lives – having brought down regimes and seen the transition of power in varying degrees of an 'orderly fashion'.

While these two facets of Africa's year may, in many respects, seem worlds apart, for a continent where transaction, execution and political risk have always been tremendous gating issues for investment, they really are much more linked than at first they may appear.

Initially, one might be inclined to think that such traumatic and violent events as experienced in Africa would be of the highest level of detriment to the confidence of the outside world; however, it is fair to say that this has not been the case. Many of the affected countries in North Africa have seen a remarkable turn around in a comparatively short period of time – confidence levels have been heightened at the prospect of a country run on the basis of a transition to proper democracy, with all the stability that may bring.

A country that has had more than its fair share of issues this past year is Cote d'Ivoire, which itself suffered catastrophic levels of civil unrest, with the previous president refusing to hand over the reins of office to his democratically-elected successor. The country is seeing an extremely rapid restoration of its previous GDP growth rates, with its troubles, while devastating for those who had to live through them, really registering as nothing more than a blip on a macro-economic scale.

When you compare and contrast the financial calamity presently occurring in much of the rest of the developed world, and the eurozone in particular, it is interesting to see how such different types of 'change events' have made their impact, and how long any consequent adverse effect pervades over future growth and prosperity. In many respects, the situation in Africa seems in order of magnitude more serious, and yet the resilience of the key investment destinations on the continent seems to suggest otherwise. The positives of the world's truly last remaining emerging 'high growth' market outweigh the negatives, particularly when the will of the people to run their countries on a truly democratic basis pervades.

With this there can be no doubt that the installation and proper functioning of democracy, with its consequent impact on the stability of the other key institutional pillars on which any sovereign state must be built, ensures that such pillars are made of stone and not sand. It is indeed somewhat ironic that a country such as Greece, the cradle of democracy as we know it, should be suffering some of the most significant and long-term damage, with truly no real end in sight, whereas the emergent and frontier nations of Africa are carving their own version of the democratic process and beginning to put their own futures on a more solid footing.

It also seems likely that these trends will continue, with the will of the people shaping the future more and more – no longer putting up with the corruption and tyranny that has been one of the single biggest issues facing those in the institutional financial community wishing to transact in Africa.

It will be interesting to see how events play out in Nigeria, where once again, the country's population is finally speaking out against the behaviour of its leaders and politicians. We believe that 'behaviour modification' will once again be the outcome and that there will be another example of the ordinary man improving his nation, not just for his own sake, but in the eyes of the world as a whole.

And what will this age of renaissance bring with it from a transactional perspective? 2011 saw a huge increase in M&A activity in the minerals sector. This seems likely to continue, although much will depend on the key market pricing of such assets, which is itself affected by the more significant financial events unfolding in the rest of the world.

Clearly for the strategic investors in such assets, whose motivations are not solely financially/returns driven, appetite for mineral deals will likely continue unabated, with world financial/market price dynamics perhaps creating some opportunistic deals.

It seems inevitable that a number of the world's G20 economies will return to recession in 2012, which will clearly have a knock-on effect for emerging markets such as Africa. There will be an inevitable flight of capital to haven assets and locations, with consequent devaluing currency effects in particular. But we saw this in 2008-09 – and this time around, there is good reason to believe that, however much of a downturn may occur, it is unlikely to reach the levels triggered at that time.

Further, it is also likely that in such circumstances, good quality assets may end up 'on the block' as large global players seek to de-lever. As such, buyside opportunities may be aplenty. Africa M&A has never depended on the huge levels of leverage that have historically been deployed in more developed markets, so a bank liquidity squeeze will not be felt so acutely. The old Africa deal adage of 'good quality assets, keenly priced' may well be about to get dusted down.

As for sectors, the trends of last year will continue with increasing focus on consumer (in all its many facets), and consumer facing, businesses. Increased levels of bank regulation, capital adequacy requirements as well as global uncertainty and balance sheet exposure to toxic assets, may well mean that the number of material bank deals occurring is likely to be down and that the financial services landscape may look relatively unchanged in 12 months' time.

Agribusiness will continue to grow in importance as a destination investment sector – the increasing world food shortage, the availability of attractively-priced high-quality land and the ability to lever such transactions given the core asset base all indicate a busy year for this nascent asset class.

Scott Nelson (pictured) is executive and head of Edward Nathan Sonnenbergs (ENS) Africa.