Kenya's
financial services industry has once again cemented its place among Africa's
best-performing markets, delivering shareholder returns that outpaced the
global average.
Even so, Tanzania took top honours, underscoring East Africa's growing dominance as the continent's financial powerhouse.
A new 2026 Future of Finance Report by Boston Consulting Group (BCG) shows Tanzania generated a remarkable 59 per cent Total Shareholder Return (TSR) over the three years to December 2025, the highest in Africa.
Kenya followed with an impressive 36 per cent, comfortably beating the global average of 23 per cent and South Africa's 24 per cent.
The findings signal a shift in Africa's financial landscape, where East Africa is increasingly driving value creation markets rather than the continent's traditional financial hubs.
While Tanzania emerged as the outright leader, Kenya's performance reflects the strength of a financial ecosystem built on digital innovation and widespread financial inclusion.
According to BCG, Kenya's success has been powered by the deep integration of mobile money, particularly M-Pesa, which has transformed access to financial services.
Over the past two decades, financial exclusion has fallen dramatically from about 50 per cent to just 10 per cent, allowing millions of people and businesses to participate in the formal financial system.
That digital infrastructure has created fertile ground for banks, fintech firms and payment companies to grow revenues while expanding customer reach, translating into returns that comfortably outperformed global peers.
"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."
Surging investor confidence, however, drove Tanzania’s stronger performance.
BCG found that 99 per cent of Tanzania's listed bank equity now trades above book value, placing the country alongside mature markets such as Canada, where the figure also stands at 99 per cent, and the United States at 98 per cent.
Such valuations reflect strong profitability and growing investor optimism about the country's banking sector.
The latest findings reinforce East Africa's rise after Kenya also stood out in BCG's previous edition of the report.
In the earlier survey, Kenya ranked among Africa's strongest financial markets, buoyed by its advanced digital payments ecosystem and rapid fintech adoption.
Tanzania has since accelerated even faster, overtaking Kenya to become the continent's leading market for shareholder value creation, highlighting how competitive the East African financial sector has become.
The report, which analysed performance across banks, payments firms and asset managers globally using S&P Capital IQ data between 2020 and 2025.
It also shows that financial institutions were the world's best-performing sector in 2025, generating a trailing 12-month TSR of 30.2 per cent, ahead of information technology at 26.8 per cent and all other industries.
Africa's financial institutions are also becoming more efficient.
The firm found that the continent improved its operating expense-to-asset ratio by 20 basis points between 2020 and 2025, ranking second globally behind China, which recorded a 29-basis-point improvement.
Despite the strong results, BCG warns that the easy gains have largely been exhausted.
The consultancy argues that much of the recent profitability has come from revenue growth and cost containment rather than fundamental transformation.
To sustain momentum, financial institutions will need to embrace artificial intelligence not as a marginal productivity tool but as a core business strategy.
The report urges bank chief executives to concentrate investments on six to eight high-impact AI initiatives capable of reshaping operating models.
It urges them to shift technology spending from maintaining existing systems to building new growth platforms.
It also recommends more aggressive mergers and acquisitions, greater investment in technology-led expansion and positioning early for emerging opportunities in digital assets, non-bank financial services and AI-driven banking.
The broader fintech ecosystem also continues to gather pace.
According to BCG and FT Partners, the Middle East and Africa fintech market expanded by about 20 per cent in 2025, fuelled by mobile money, digital wallets and expanding financial inclusion.
Business-to-business financial services, lending and insurance offered the region's biggest untapped opportunities.
