African banks outperform global peers on financial growth, says McKinsey
Africa’s banking sector has emerged as one of the most dynamic financial markets in the world, significantly outperforming global peers. High interest rates and strong growth in non-interest income have driven this momentum, according to a report by McKinsey & Company.
The global financial system had a very successful 2024 followed by continued growth in 2025, when total revenues reached around $5.9 trillion and rate of equity (ROE) held steady at around 10%. Even alongside this solid performance in banking at the global scale, Africa’s financial sector stood out.
The analysis shows that African banks delivered a ROE of 19% in 2024 and 17% in 2025. This performance sits well above the global banking profit average of approximately 10% recorded over the same two years. This profitability means that the financial sector has expanded its footprint within the broader African economy, growing its share of gross domestic product by 0.4 percentage points between 2020 and 2024.
However, this rapid growth has gone somewhat under the radar, obfuscated by currency fluctuations across the continent. On a local currency basis, the banking sector expanded by an impressive 17% annually.
When converted into US dollars, currency depreciation and inflation slowed the reported revenue growth to a more modest annual rate of 5.2%, moving from $81 billion in 2020 to $99 billion in 2024. As economic conditions started to steady, revenue growth in dollar terms accelerated to 7% in 2025, bringing the total market size to an estimated $107 billion.
Key markets drive sector consolidation
The African financial market is highly concentrated, with a small number of regions generating most of the continent’s banking revenue. Five nations accounted for approximately 70% of all revenues across the continent in 2024, with most in South Africa and Egypt.
South Africa represents the largest individual market in Africa, accounting for more than a quarter of the total revenue pool with $26.4 billion. Egypt stands as the second largest financial market with $18 billion, followed by Nigeria at $8.7 billion, Morocco at $6.9 billion, and Kenya at $5.9 billion.
Industry experts anticipate that these five powerhouse nations will continue to dominate the landscape. However, a new wave of regulations is expected to trigger widespread changes, particularly in countries like Kenya.
New rules from the Kenyan central bank include much higher capital requirements for 2029, which will likely push smaller organizations toward mergers and acquisitions. This race for scale is encouraging firms to expand across borders or purchase niche technology companies to maintain their competitive edge.
Meanwhile in South Africa, client revenues have grown steadily in the recovery phase from the challenges of Covid-19 and are expected to reach $31 billion by 2030. Like in other markets, lending is the primary engine of growth, but payments are expected to contribute to future momentum.
The market is consolidated, with four major banks – Standard Bank, FirstRand, Absa, and Nedbank – making up 82% of the market. South African banks have been optimizing operations and diversifying revenue streams, both within South Africa and beyond South Africa’s borders in new efforts to expand into new markets.
In Egypt, the banking sector saw a CAGR of 10% between 2018 and 2024, with client-driven revenues hitting $18 billion in 2024. The market here too is consolidated, with 66% of total assets in 2024 in the hands of the country’s top five banks.
Recent years have seen an increase in financial inclusion in Egypt, fueled partly by new regulations. Millions of citizens in the North African country have only just recently become financially included in the system, meaning banks have large new pools of new customers.
Technology and small business expansion
Looking toward 2030, the sector is shifting to leveraging advanced technology to unlock new growth, especially among smaller enterprises. Small and medium enterprises have historically been underserved, with roughly 88% of these businesses lacking access to traditional bank accounts in places like Egypt. Financial institutions are planning to fix this gap by combining tax, payment, and point-of-sale data to automate small loan approvals, reducing decision times from weeks to just a few days.
At the same time, banks are preparing to scale up their IT systems by integrating AI tools. The widespread adoption of generative AI and automated digital assistants is projected to add between $200 billion and $340 billion in global productivity impact each year.
For African institutions, putting AI to work in credit modeling, fraud detection, and customer onboarding will lower operational costs and help protect firms against cyber threats. Firms will also be able to combine telecommunications data with AI to deliver instant, customized loans and savings options to a young, tech-savvy population.
“The story of African banking is no longer just one of emerging potential, but of proven performance, innovation, and resilience, creating a solid base from which to build toward 2030,” notes the McKinsey report.
Nevertheless, the evolving African banking sector requires that banks adapt their strategies for long-term growth amid intensifying competition and economic volatility. Those that proactively protect returns against currency volatility, pursue strategic consolidation to gain scale, and invest in data-first operations are likely to be best positioned. Additionally, by targeting underserved segments and leveraging innovative technologies, Africa’s financial players can convert today’s momentum into lasting success.”
