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Africa's banking sector has crossed a historic threshold, but the milestone comes with a significant asterisk.
Revenues across the continent reached $107 billion in 2025, the first time the industry has broken past the $100 billion mark, according to a new report by McKinsey & Company. Mayowa Kuyoro, a partner and head of McKinsey's financial services practice in Africa, said the sector had moved decisively from a story of potential to one of performance. The consulting firm documented both the scale of that shift and how narrowly it is shared.
Five markets, Egypt, Kenya, Morocco, Nigeria and South Africa, generated roughly 70% of the continent's total banking revenue in 2024, with South Africa alone accounting for $26.4 billion, or more than a quarter of the total. Smaller economies are growing faster, and McKinsey says new frontiers are opening, but the dominance of the top five is unlikely to shift meaningfully in the near term.
On a constant-currency basis, the numbers look even stronger. African banking revenues grew at a compound annual rate of roughly 17% between 2020 and 2024, compared with a global average of 7%. But currency depreciation across several markets tempered that story in dollar terms. In U.S. dollar terms, revenues grew at a more modest 5.2% annually, reflecting sharp exchange-rate swings across several markets, rising from $81 billion in 2020 to $99 billion in 2024 before accelerating to 7% growth in 2025 as macroeconomic conditions improved.
Profitability is where Africa's banks stand apart. Return on equity stood at 19% in 2024 and is expected to ease to 17% this year, compared with a global banking average of about 10%. Higher interest rates and growing noninterest income, including fees and commissions, drove the gains. McKinsey noted, however, that these strong returns are largely driven by favorable external factors rather than improvements in operational efficiency, with African banks carrying a cost-to-assets ratio of 2.6%, double the global average of 1.3%.
The demographic case for longer-term expansion is harder to dispute. Africa's population grew by more than 2% annually between 2020 and 2025, while the working-age population expanded by nearly 3% per year, creating a large and growing base of potential banking customers. Lending is projected to reach $52 billion by 2030, with small and medium-sized enterprises expected to be the fastest-growing segment, expanding at roughly 8% annually through the end of the decade.
Experts tracking the sector say smaller-market banks will need to find their own lane rather than replicate what the continental giants have built.
"The next wave of growth will not come from replicating large-market models, but from solving structural gaps," said Sheriff Adedokun, chief executive officer of Nigerian fintech startup Clea, pointing to trade finance, diaspora payments and transaction-based services as areas with significant headroom.
Ifelade Ayodele, chief executive officer of payments platform Blaaiz, made a similar point. Competing head-on with dominant banks in the major markets is the wrong approach, he said, with micro-distribution, rural finance and technology-driven lending offering more viable paths.
Nigeria's banking market is projected to grow at a 7% compound annual rate, reaching about $16 billion by 2030, driven by increased financial inclusion, digital ecosystem expansion and deeper penetration of the small and medium-sized enterprise segment. Currency volatility, high unemployment and inflation forecast between 4% and 6% through 2030 remain the sector's most pressing headwinds.
