Small and medium-sized enterprises across Africa have long been the backbone of the continent's economies while remaining largely shut out of formal banking.
A landmark report by McKinsey & Company now signals that this is beginning to change, and that the SME segment will be the fastest-growing segment in African banking over the next five years.
A $107 Billion Market with an Underserved Core
The March 2026 McKinsey report on African banking reveals that the retail and corporate segments collectively generated around 88 percent of total sector revenue in 2024, at $48.9 billion and $38.1 billion respectively.
The SME segment, while smaller, is projected to grow at 8 percent compound annual growth rate through 2030, the fastest pace of any segment, with SME lending specifically forecast to expand at 10.5 percent CAGR over the same period.
For years, poor credit histories and limited customer data have made it difficult to extend credit to African SMEs at scale.
Traditional credit assessments have struggled to capture the true viability of small business models operating largely outside formal financial systems.
The McKinsey report notes that rising digital adoption is beginning to close this gap by generating richer data trails, including digital payment histories, mobile money transaction records, supplier information, telecom usage patterns, and utility payment data, all of which offer lenders new windows into creditworthiness.
Digital Payments Opening the Door
The role of payments in reshaping African banking cannot be overstated. Between 2020 and 2024, payments were among the fastest-growing categories in African banking, drawing in multiple new fintech entrants.
In Kenya alone, digital lending grew by 32 percent between 2020 and 2024, with demand for digital credit providers rising by a remarkable five times between 2023 and September 2025.
Safaricom's M-PESA platform exemplifies the transformation underway. With more than 35 million active monthly customers, M-PESA now powers mini-applications spanning agriculture and e-commerce, and has grown its share of Safaricom's total revenue from 31 percent in 2021 to 42 percent in 2025.
Nigerian fintechs Moniepoint and OPay have similarly evolved from payment processors into full-service financial platforms serving individuals, agents, and SMEs across the country.
Reimagining the Lending Model
One Egyptian bank cited in the report has moved beyond legacy credit underwriting by creating a dedicated digital SME lending platform capable of offering instant loan approval and funding within 24 hours.
The McKinsey report describes this as an example of the paradigm shift that may be required for banks to fully unlock the SME opportunity, moving away from paper-heavy, branch-dependent processes toward seamless digital experiences.
The report also highlights that lending products are projected to remain the largest revenue pool in African banking through 2030, valued at just over $30 billion in 2024 and making up 30 percent of total revenues.
As interest rates ease, that lending pool is expected to swell to nearly $52 billion by 2030, with SME lending leading the charge.
For African banks willing to invest in data infrastructure and alternative credit scoring, the SME segment represents not only the continent's largest pool of untapped lending opportunity, but also a fundamental test of whether financial inclusion can be made commercially sustainable at scale.
READ ALSO: Mahama Rejects Political Victimisation, Pledges Fairer Path for Private Sector
