Stronger capital, bigger loans: Africa’s banking outlook for 2026

African banks spent 2025 consolidating, shoring up capital, tightening risk controls, and investing in digital infrastructure, following years of macroeconomic volatility marked by currency depreciation, inflation, and regulatory tightening. 

Across key markets, lenders focused less on rapid expansion and more on balance sheet strength, compliance, and operational resilience as regulators pushed higher capital standards and more conservative risk management.

That consolidation phase is now shaping the outlook for 2026. With stronger capital buffers, improving asset quality, and wider digital reach, African banks are entering the new year better positioned to scale lending, finance infrastructure and trade, and attract long-term capital. 

The shift marks a move from defensive banking to growth-oriented intermediation, one that could define the sector’s role in Africa’s next phase of economic expansion.

Nigeria, Kenya, and South Africa will shape the future of banking in Africa, with key developments defining the sector in 2026.

Kenya 

In 2026, Kenya’s banking sector will be shaped by tougher regulation, fewer but larger banks, and technology that is beginning to feel more personal. Over the past year, the Central Bank of Kenya (CBK) has had run-ins with several lenders, including Access Bank, Kingdom, and Guardian, particularly over their reluctance to pass on the benefits of monetary policy to customers.  

By December, banks like Premier Bank, Access Kenya, UBA Kenya, CIB, ABC Bank, and M-Oriental Bank had failed to meet the KES 3 billion ($23.2 million) core capital threshold. Others are the state-owned Consolidated Bank and the Development Bank of Kenya.  CBK is expected to take action in the coming months.

Bigger banks, fewer players

The Kenyan banking sector is likely to witness more consolidation in 2026. In 2024, the CBK released a plan to increase core capital gradually to KES 10 billion ($77.5 million) by 2029, ending the era of undercapitalised banks. 

By the end of 2026, every bank is expected to meet a minimum core capital requirement of KES 5 billion ($38.7 million) and reach KES 10 billion ($77.5 million) by 2029.

For large banks like KCB Group, Equity Group, DTB, NCBA, and Stanbic, this is manageable. For smaller Tier 3 lenders, it’s a fork in the road. Some will raise fresh capital. Others will shop for merger partners.

Nigerian banks, such as Access and Zenith, view Kenya as a strategic base for East and Central Africa, while local giants like Equity and KCB are consolidating their dominance at home through recent acquisitions. The result is stronger financial institutions, banks that are less vulnerable to economic shocks.

Kenyan banks are also thinking beyond the borders, but with the East African region, with KCB, Equity, and Co-operative Bank setting their sights on Ethiopia.  

A growing share of KCB, Equity, DTB, I&M, and NCBA profits comes from places like the Democratic Republic of Congo (DRC), Uganda, Rwanda, and Tanzania, indicating that their models are becoming regional.

Bonds go mainstream

In recent years, CBK and other financial sector players have been trying to make government bonds accessible to small investors.

The CBK’s DhowCSD platform—an app that enables users to buy treasury bonds and bills— has grown, making the investment process for many retail investors less technical and friendlier. 

Banks like Standard Chartered and KCB Group have also added bond investment options on their digital banking apps, increasing accessibility.

Credit gets personal

From late 2024 to the whole of 2025, CBK was in endless fights with commercial banks, accusing them of failing to “transmit the benefits of monetary policy to borrowers.” 

Small and Medium Enterprises (SMEs) have complained that banks don’t understand them.  

The excuse banks gave over the years will wear thin in 2026. Banks have started to use risk-based pricing models approved by the CBK in 2025. 

The idea of a one-size-fits-all interest rate has ended. Loan prices will now depend on transaction history, bill payments, business activity, and patterns over time.

Green money and modern SACCOs

Kenyan banks are actively tying green lending to cheaper capital from international climate funds. 

That means lower interest rates for electric motorcycles, solar pumps, and clean energy projects, especially in agriculture.

At the same time, Saving and Credit Cooperative Organisations (SACCOs) are finally catching up. Long seen as old-school and slow, many like Stima Sacco, Mwalimu Sacco, and Kenya Police Sacco are now fully digital. 

Mobile loans are instant, and savings are real-time. In terms of capital, the line between a Tier 2 bank and a large SACCO is becoming thinner.

Nigeria 

Nigerian banks spent 2025 building muscle for scale after the Central Bank of Nigeria (CBN) triggered the most ambitious recapitalisation push in two decades.

In 2024, the apex bank raised minimum capital requirements across the banking industry, arguing that stronger balance sheets were necessary to absorb unexpected losses, support Nigeria’s ambition of a $1 trillion economy, restore public confidence, and reinforce financial system stability.

By 2025, the sector showed signs of stability. Key Financial Soundness Indicators (FSIs) broadly aligned with prudential benchmarks, according to the CBN, supported by strong net interest income, accelerated digital transformation, and the ongoing recapitalisation process. Together, these factors positioned banks to better mitigate emerging risks and uphold system-wide stability.

So far, 21 banks have met the capital requirement.

With larger capital buffers, Nigerian banks will have more room to scale with Zenith Bank, following in Access Bank’s footprint to expand to Kenya, strengthening solvency, boosting competitiveness, and reinforcing their ability to meet both domestic and international financial obligations while staying aligned with global regulatory standards.

Under the new regime, banks must raise minimum paid-up capital based on their operating licences: international banks to ₦500 billion ($352.19 million), national banks to ₦200 billion ($140.88 million), regional banks to ₦50 billion ($35.22 million), merchant banks to ₦50 billion ($35.22 millio), non-interest banks with national authorisation to ₦20 billion ($14.09 million), and non-interest banks with regional authorisation to ₦10 billion ($7.04 million).

What this means for 2026

The expanded capital base gives banks greater capacity to underwrite big-ticket loans—particularly for infrastructure, energy, and large-scale manufacturing—sectors the CBN sees as critical to lifting total factor productivity and advancing Nigeria’s $1 trillion economy ambition.

It is also expected to strengthen financial soundness, deepen investor confidence in the financial system, and attract higher capital inflows into the economy.

More broadly, stronger banks provide the foundation for financial stability that can support real-sector productivity, inclusive growth, and SME financing, while mitigating systemic risk through scale and promoting sustainable, broad-based economic development.

More ATMs 

ATMs will make a comeback in 2026 with the CBN signalling a preference for bank-managed cash distribution, through ATMs, over the heavy reliance on Point-of-Sale (PoS) terminals in circulars at the end of 2025. 

According to a CBN draft regulation, banks must deploy one ATM for every 5,000 active cards issued, achieving 30% compliance by 2026, 60% by 2027, and full compliance by 2028. 

Expanding ATM networks will allow lenders to regain control of last-mile cash distribution at a cost, but with stronger capital buffers following recapitalisation, ATM deployment will become a key pillar of how banks scale access and support financial inclusion. 

Risks

Despite stronger capital buffers, risks remain elevated as banks head into 2026. Non-performing loans (NPLs) are rising. The industry’s NPL ratio stood at about 7% in 2025, above the prudential threshold of 5%, reflecting the phased withdrawal of regulatory forbearance introduced during the COVID-19 period. 

While manageable for now, a sustained increase in impaired assets could quickly pressure earnings and constrain banks’ willingness to extend new credit. If left unchecked in 2026, rising NPLs could pose a direct threat to profitability, credit availability, and banks’ overall risk-bearing capacity. 

A material spike in credit losses, especially when combined with foreign exchange illiquidity, could erode capital buffers, trigger breaches of prudential limits, and strain liquidity coverage ratios. 

Such pressures would weaken financial intermediation, undermine market confidence, and expose fault lines across the banking system.

Currency risk remains another key vulnerability. A sharp depreciation of the naira after 2025’s stability would reprice foreign currency exposures and tighten liquidity positions, particularly for banks with significant FX-denominated obligations. 

South Africa

In 2026, South Africa’s banking sector will be shaped by tighter monetary conditions and a growing reliance on digital ecosystems to drive inclusion. Over the past year, the South African Reserve Bank (SARB) increased its scrutiny of liquidity management and credit exposure, as elevated interest rates and slow economic growth test the resilience of financial institutions. 

Yet the defining feature in 2026 will be structural reform: finance is moving from a protected, bank-led regime to an open, interoperable environment where non-banks can compete at the core settlement layer.

Open Finance becomes mainstream, not experimental

South Africa’s banking sector will be defined by a rigorous push toward “Open Finance,” changing how capital is held, and eroding the dominance of traditional “Big Four” banks, including Standard Bank, Absa, Nedbank, and First National Bank (FNB), as low-cost, tech-driven challengers gain ground. 

While the South African Reserve Bank (SARB) maintains its reputation as a strict regulator, its focus has shifted from merely protecting banks to opening the gates for fintechs.

In August 2025, South Africa opened the National Payments System (NPS) to non-banks. 

Following the promulgation of the NPS Bill in 2025, fintechs like Stitch, Ozow, and Yoco, along with mobile operators like Vodacom (VodaPay) and MTN (MoMo), can now settle transactions directly without needing a traditional bank as a “sponsor.”

This shift is set to turn banking into an “invisible layer.” Consumers increasingly use “Super Apps” where banking is embedded into daily life. For example, FNB’s digital ecosystem and Avo, Nedbank’s super app, have evolved into marketplaces where users manage everything from solar installations to groceries within a single interface.

South Africa re-prices credit markets

A major structural shift is underway as South Africa reviews the prime lending rate used to price approximately R6.2 trillion ($378 billion) of credit. Since 2001, this measure has been fixed at 350 basis points above the repo rate. As of January 12, 2026, the SARB is investigating whether to abolish or adjust this spread. If the reforms proceed,  2026 could see cheaper borrowing for households, improved SME loan access, and downward pressure on debt-service burdens, provided reforms safeguard bank profitability to maintain financial stability. 

Digital and instant payments become dominant

South Africa’s digital payment usage is high and growing fast. According to SARB, user adoption of digital channels like instant payment increased by about 5% in 2023 and a further 14% in 2024 for supervised payment services.

Instant payments and better payment analytics are supporting new business models for SMEs while intensifying competition with fintechs in Buy Now Pay Later (BNPL) and point-of-sale credit. Digital payments have become a standard for consumer-to-business transactions, and more businesses are using digital systems to pay their suppliers in 2026.

Instant payments, specifically PayShap, are on the rise as consumers expect funds to reflect the minute a payment is made. By August 2025, PayShap transaction volumes surpassed 44 million monthly, signaling a move toward real-time settlement as the default expectation.

South African regulators have responded by modernising the National Payments System to ensure different banking systems work together. While the underlying technology is intricate, the complexity remains in the background, allowing users to enjoy seamless transactions.

Stronger capital buffers and regulatory reforms have created room to scale for African banks, but the test now lies in execution: how effectively banks convert balance-sheet strength into productive lending, manage risk in volatile macro environments, and support real economic activity. 

2025 proved that African banks can dream up big ambitions. 2026 will be shaped by how they deploy that ambition at speed and with discipline.