Africa’s $107 Billion Banking Market is Controlled by 5 Countries – Report

But as digital adoption accelerates, underserved populations come online and smaller economies post faster growth, the industry’s center of gravity is beginning to shift away from its traditional strongholds toward new, more fragmented frontiers of opportunity

Africa’s banking industry is large, profitable and still deeply uneven.

The sector, valued at about $107 billion in 2025, continues to be dominated by a small group of countries even as new pockets of growth emerge across the continent, according to a recent report by the consulting firm McKinsey.

Roughly 70 percent of banking revenue in 2024 was generated by just five markets: Egypt, Kenya, Morocco, Nigeria and South Africa. South Africa alone accounted for more than a quarter of the total, contributing $26.4 billion, the report found.

The concentration is expected to persist. But beneath it, a quieter shift is underway.

Smaller economies are expanding at a faster pace, buoyed by rising digital adoption and millions of customers who remain outside the formal banking system. These markets, long overlooked, are beginning to draw the attention of lenders searching for new sources of growth.

“Banks in smaller African markets can unlock growth by focusing on digital-first banking models that extend services beyond physical branches,” says Akin Adegoke, Chief Digital Officer at Nigeria-based LOTUS Bank.

Partnerships are central to that strategy. Working with fintech companies and telecom operators allows banks to innovate more quickly and reach customers at lower cost. New products, particularly in small business lending, agriculture and non-interest banking, are also opening fresh revenue streams.

Even with its structural imbalances, Africa’s banking sector has outperformed many of its global peers. Banks delivered a return on equity of 19 percent in 2024 and an estimated 17 percent in 2025, compared with a global average of about 10 percent. Higher interest rates and a growing share of noninterest income have helped drive those gains.

The industry’s footprint in the broader economy is also increasing. Between 2020 and 2024, banking’s share of gross domestic product rose by 0.4 percentage points, alongside steady revenue growth when measured in local currencies.

Yet the picture looks less robust in dollar terms. Currency depreciation and foreign exchange volatility have eroded some of those gains. Revenues rose from $81 billion in 2020 to $99 billion in 2024, a compound annual growth rate of 5.2 percent, roughly in line with global trends. Growth is estimated to have accelerated to about 7 percent in 2025 as macroeconomic conditions improved.

Demographics remain one of the sector’s strongest tailwinds. Africa’s population grew by more than 2 percent annually between 2020 and 2025, while the working-age population expanded at nearly 3 percent a year. The result is a larger and increasingly connected customer base.

But the same structural challenges that have long shaped African economies continue to weigh on the outlook. High unemployment, low income levels and persistent currency pressures pose risks. Inflation, projected at between 4 percent and 6 percent by 2030, could further constrain growth.

For banks in smaller markets, the path forward may lie not in imitation but in specialization.

“The next wave of growth will not come from replicating large-market models, but from solving structural gaps,” says Sheriff Adedokun, CEO of Nigerian fintech startup Clea.

He points to trade finance, diaspora payments and transaction-based services as areas of untapped opportunity, particularly as cross-border commerce expands.

Competing head-on with dominant lenders in the continent’s largest economies, some executives argue, would be a costly mistake.

“The smarter approach is to focus on specialized, niche offerings that complement rather than compete,” Ifelade Ayodele, CEO of payments platform Blaaiz, told Forbes Africa.

Micro-distribution, rural finance and technology-driven lending are among the segments where smaller banks can build durable businesses, he adds, by serving customers who have long been excluded from traditional banking models.

In that sense, Africa’s banking story is no longer just about scale. It is increasingly about reach, and about whether institutions can extend financial services to the vast segments of the population still left out of the system.

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