East Africa is fast emerging as the new battleground for Africa's banking giants, with Kenya at the center of a rapid expansion race that is reshaping the continent's financial landscape.
In just one week, two major announcements underlined the change. South Africa's Nedbank Group unveiled plans to acquire a 66 percent stake in NCBA, one of Kenya's top lenders, while Nigeria's Zenith Bank won regulatory approval to enter the market through the acquisition of 100 percent of Paramount Bank.
They join a growing list of pan-African banks deepening their Kenyan footprint. Access Holdings, Nigeria's largest banking group by assets, completed the acquisition of National Bank of Kenya (NBK) from KCB Group in 2025, having previously purchased Transnational Bank – now Access Bank Kenya – in 2020. Last year, Dubai-based Soren Investment Co. acquired Gulf African Bank, Kenya's largest Islamic lender.
These moves reflect a broader recalibration of African banking strategy. While Ethiopia’s recent liberalization has attracted strong interest, Kenya remains the crown jewel – offering scale, regulatory depth, fintech sophistication and regional reach unmatched elsewhere in East Africa.
A calculated bet on Kenya
“Nedbank pushed for the Kenya Bank deal, which was expected, given Standard Bank has long been seen as a potential buyer,” said Charles Robertson, head of macro-strategy at FIM Partners, on social media platform LinkedIn.
Robertson said the South African interest in Kenya is consistent with his “time-traveling economist” thesis that “Kenya will be the next African country to industrialize and develop after Egypt, and the first in sub-Saharan Africa after Mauritius.”
“The deal, worth approximately $0.9 billion, is equivalent to approximately 0.6 percent of Kenya’s GDP, making it a meaningful boost to foreign direct investment,” said the renowned emerging and frontier markets expert.
Kenya has been eager for such an influx. FDI into East Africa's largest economy fell by a modest 0.1 percent to $1.503 billion in 2024 from $1.504 billion a year earlier, UN Trade and Investment data showed. Large bank entries help offset that softness while strengthening confidence in the country's financial system.
Currency Stability and Macro Reset
The timing of bank flows is noteworthy. After suffering its worst depreciation in more than three decades, the Kenyan shilling has stabilised. Bloomberg data shows the currency could decline 21 percent against the dollar in 2023, its biggest decline since 1993, before a strong bounce in 2024.
After weakening to KSh160/$ in January 2024, the shilling ended the year with a 17.4 percent appreciation and traded in a relatively stable KSh128–131/$ range through 2025.
To prevent an earlier slide, the Central Bank of Kenya (CBK) raised its benchmark rate by 200 basis points to 12.5 per cent in December 2023, the biggest increase since 2011. As the pressure eased, the rate was gradually cut to 9.5 percent through August 2024 and to 9.0 percent in December, its lowest level in two years.
Yet stability has also been examined. Last October, the International Monetary Fund described the shilling as “overly stable”, questioning whether it fully reflected market forces. This assessment underscores the delicate balance Kenyan officials are trying to maintain.
regulation opens the door
An important regulatory change has strengthened Kenya's appeal. Last year, the country lifted a 10-year freeze on new commercial bank licenses that was imposed after governance failures led to turmoil in the sector in 2015. The freeze reduced the number of banks from 44 to 38.
New entrants now face a significantly higher minimum capital threshold of KSh10 billion (about $77 million) – a hurdle that favors larger, well-capitalized regional lenders and helps explain the increase in acquisition-led entry.
At the same time, many foreign banks have retreated. Bank Al Habib closed its representative office at the end of May, while groups such as Credit Suisse, Barclays and Atlas Mara have reduced or restructured African operations.
A recent Moody's report said that many Western banks that once saw Africa as “the next frontier” have been disappointed by the returns. “Profitability often falls short of expectations when adjusted for currency movements and capital weights,” the global ratings agency said.
A fintech powerhouse
However, the country's most attractive attraction lies in its digital financial ecosystem. With a population of approximately 60 million, it is globally recognized as a fintech leader. Mobile money platforms like M-Pesa and Airtel Money have taken financial inclusion to record levels.
According to the World Bank, by 2024, 90.1 percent of adults will be banked, making Mauritius the African country with the most banked population. About 93 percent have a mobile phone, 60 percent use the Internet, and 89 percent have made or received digital payments.
For pan-African banks, Kenya offers a ready laboratory for digital lending, payments, neobanking and data-driven credit far beyond traditional branch-based banking.
That benefit is already visible in brand strength. Kenya's three largest lenders—Equity Bank, KCB Group and Co-operative Bank—recorded the highest brand-value growth in Africa last year, rising 25.1 percent to $1.18 billion, according to global market research firm Brand Finance. It left South Africa, Egypt and Nigeria behind.
Brand Finance said, “The banking sector contributes more than half of the ranking's total brand value, underscoring its central role in Kenya's economy.”
Follows profit growth
Kenya's macro backdrop also improved as GDP grew 4.9 percent year-on-year in the third quarter of 2025 from 4.2 percent a year earlier, while inflation stood at 4.5 percent in December, within the CBK target. The IMF has projected growth at 4.9 percent in 2026, while the government has set a target of 5.6 percent.
Banks listed on the Nairobi Securities Exchange are already benefiting. The 11 lenders' combined pre-tax profit rose 10 percent to KSh269.0 billion ($2.07 billion) in the first nine months of 2025, while after-tax income rose 10.8 percent to KSh205.0 billion ($1.58 billion).
Equity Group led the way with a 28.5 percent increase in pre-tax profit to KSh65.6 billion ($505 million), followed by KCB Group with KSh62.1 billion ($478 million). Co-operative Bank posted KSh30.0 billion ($231 million). But some foreign lenders struggled. Standard Chartered's pre-tax income fell 41.2 per cent to KSh13.20 billion, and Stanbic Holdings saw its pre-tax income decline 8.3 per cent.
“The stability of the shilling, improving forex inflows and stronger reserves translated into better funding conditions and higher profits,” analysts at Abojani Investments said in a recent webinar on banks' third-quarter reports. He said banks are increasingly using technology to cut costs and diversify income.
entrance to a large area
Kenya's strategic value extends beyond its borders. As the commercial hub of the East African Community, it provides access to a market spanning Tanzania, Uganda, Rwanda, Burundi, South Sudan and the Democratic Republic of the Congo.
A strong Kenyan platform allows banks to expand regionally with less friction – an advantage that becomes even more important as Ethiopia opens up.
Ethiopia's banking liberalization – the first in half a century – has already lifted African rankings of local lenders. Awash International Bank, Bank of Abyssinia and Dashen Bank were among the biggest climbers in African Business Magazine's Top 100 African Banks 2025 list.
With more than 130 million people and an average growth of 7.4 percent projected by the IMF between 2025 and 2030, the country represents the next frontier. The Kenyan base provides a springboard.
A race that no one wants to lose
When one major bank moves, others follow. Nedbank's NCBA deal and Zenith's approval are not separate bets – they indicate competitive congestion. Nigeria's biggest lenders, from Access Bank to First Bank, are already positioning themselves.
Access Holdings' latest results shed light on why. Markets that were previously making losses – including Kenya, Mozambique and South Africa – swung from a combined N9.87 billion loss ($6.7 million) to a N16.9 billion profit ($10.9 million) in the first half.
For Kenya, the inflow promises deeper financial inclusion, greater competition and more innovation. For local banks, this raises the stakes – some may become takeover targets themselves.
