East Africa is fast becoming the center of Africa’s financial growth, with Kenya and Tanzania delivering some of the strongest returns for investors on the continent and challenging the long-held dominance of traditional financial markets.
A new Future of Finance 2026 report by Boston Consulting Group (BCG) found that Tanzania recorded the highest Total Shareholder Return (TSR) in Africa over the three years to December 2025, posting an impressive 59 per cent. Kenya followed with 36 per cent, comfortably ahead of the global average of 23 per cent and South Africa’s 24 per cent.
The figures suggest that East Africa is increasingly setting the pace for financial sector growth, helped by expanding digital services, stronger investor confidence and wider access to banking.
For Kenya, the report points to years of investment in digital finance as a key driver of its success. Mobile money services, led by M-Pesa, have reshaped the country’s financial system by bringing millions of people into formal banking.
According to BCG, financial exclusion in Kenya has fallen from roughly half the population two decades ago to about one in ten today. That broader access has allowed banks, payment firms and financial technology companies to reach more customers while improving their earnings.
“Tanzania and Kenya’s strong performance reflects more than cyclical tailwinds,” said Henok Eyob, Managing Director and Partner at BCG Kenya.
“Kenya, the country that reduced financial exclusion from 50 per cent to 10 per cent in two decades, is showing what a maturing financial system can deliver. East African institutions have earned the right to be bolder on growth and innovation,” he said.
While Kenya’s progress has been built largely on digital finance, Tanzania’s stronger performance was fuelled by growing investor confidence.
The report found that 99 per cent of Tanzania’s listed bank equity trades above book value, placing it alongside mature markets such as Canada and the United States. Such valuations often reflect investor confidence in future earnings and the health of the banking sector.
The latest findings also build on earlier BCG research, which had already identified Kenya as one of Africa’s strongest financial markets because of its advanced digital payments ecosystem. Tanzania has since accelerated its growth, highlighting increasing competition within East Africa’s financial sector.
Globally, the financial services industry was the best-performing sector in 2025, according to the report. It generated a trailing 12-month Total Shareholder Return of 30.2 per cent, outperforming information technology and every other major industry.
The report also notes that African financial institutions have become more efficient over the past five years. Between 2020 and 2025, the continent recorded the world’s second-largest improvement in operating expense-to-asset ratios, behind only China.
Even so, BCG warns that future growth will require more than cost-cutting and rising revenues.
The consultancy argues that banks should increase investment in artificial intelligence, modern technology platforms and strategic acquisitions if they want to sustain their momentum. It also identifies digital assets, non-bank financial services and technology-driven banking as areas likely to shape the industry’s next phase of growth.
Meanwhile, the wider fintech sector across the Middle East and Africa continued to expand in 2025, growing by around 20 per cent, according to BCG and FT Partners. Mobile money, digital wallets and greater financial inclusion remain key drivers, while lending, insurance and business-focused financial services are seen as offering the greatest room for future expansion.
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