As pan-African banks compete for East African scale, cross-border ambitions meet local realities.
This article appears in the October issue of Global Finance Magazine.
African banking is entering a new phase of consolidation, with major lenders expanding across borders in pursuit of scale in the continent’s fragmented financial markets.
The sector’s dynamism is reflected in its profitability. High interest rates and rising noninterest income helped African banks deliver returns on equity of 19% in 2024 and 17% in 2025—well above the 10% global average in both years, according to McKinsey & Co.
So, it comes as no surprise that South African, Nigerian and Egyptian institutions are expanding aggressively into East Africa particularly, drawn by high growth rates, strong trade links and sophisticated mobile payments ecosystems.
However, as foreign entrants deploy capital to establish a footprint, entrenched local champions in primary hubs such as Kenya are proving formidable competitors. Kenya has emerged as the principal battleground for regional banking dominance, functioning as a strategic gateway to the broader East African Community.
Driven by high domestic minimum capital requirements, South African and Nigerian institutions have turned to cross-border mergers and acquisitions to deploy idle capital and diversify earnings away from slower-growing home markets.
The flagship transaction in this wave is South Africa’s Nedbank Group Ltd.’s acquisition of a 66% controlling stake in Kenya’s NCBA Group PLC for approximately $856 million.
The cash-and-stock partial tender offer gives Nedbank an instant multicountry East African platform spanning Kenya, Uganda, Tanzania and Rwanda, as well as digital access to West Africa.
According to reports, Nedbank CEO Jason Quinn said, “Nedbank has a strategic objective to grow and diversify outside of its core Southern Africa market, and we identified East Africa as a key growth region.”
This acceleration of cross-border dealmaking aligns with academic findings on African banking integration.
“African banks definitely have an advantage over banks from advanced economies when it comes to tapping into and connecting with those institutional realities,” Dr. Dieter van Walleghem, associate professor of finance at Rennes School of Business, told Global Finance. “If you are a bank coming from a less-developed economy and moving into a similarly less-developed economy, it is easier than it is for a European or U.S. bank coming from a highly regulated advanced economy.”
Van Walleghem noted that as global giants retreat from noncore African retail operations, pan-African banks leverage shared regulatory familiarity, customer-following corporate relationships and adaptable technology frameworks to navigate local complexities more efficiently than Western entrants.
Despite these advantages, incoming foreign lenders face defensive positions from entrenched domestic incumbents. Local giants such as Kenya’s Equity Group PLC and KCB Group Ltd. leverage massive retail customer bases, extensive agency networks and deeply integrated mobile money platforms like Safaricom PLC’s M-Pesa.
Equity Bank CEO James Mwangi emphasized the scale hurdle facing foreign entrants. “When you look at our concentration of 23 million customers and a capital base of 350 billion shillings, we can outrun them, we can outperform them,” he said.
John Amari is a contributing writer based in Japan.