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

African banks spent most of 2025 in consolidation mode. After years of macroeconomic stress driven by inflation, currency volatility, and tighter regulation, lenders across the continent focused on strengthening capital buffers, tightening risk controls, and upgrading digital infrastructure.

Expansion took a back seat. Regulators pushed higher capital requirements, demanded more conservative balance sheets, and increased scrutiny around compliance and governance. The priority was resilience, not growth.

That defensive phase is now reshaping the outlook for 2026. With stronger capital positions, improving asset quality, and wider digital reach, African banks are entering the new year in a better position to scale lending, finance infrastructure and trade, and attract long-term capital. The sector is shifting from survival mode to growth-orientated intermediation, a transition that could define banking’s role in Africa’s next phase of economic expansion.

Nigeria, Kenya, and South Africa will be central to this transition, with each market charting a distinct path in 2026.

Kenya

Kenya’s banking sector in 2026 will be shaped by tougher regulation, fewer but larger banks, and technology that is becoming more personalised. Over the past year, the Central Bank of Kenya (CBK) clashed with several lenders, including Access Bank, Kingdom Bank, and Guardian Bank, over their failure to pass on the benefits of monetary policy easing to customers.

By December, banks such as Premier Bank, Access Kenya, UBA Kenya, CIB, ABC Bank, and M-Oriental Bank had not met the KES 3 billion core capital requirement. State-owned lenders, including Consolidated Bank and the Development Bank of Kenya, were also below the threshold. Regulatory action is expected in the coming months.

Kenya is heading toward a more consolidated banking sector. In 2024, the CBK unveiled a roadmap to raise minimum core capital to KES 10 billion by 2029. By the end of 2026, banks must meet a KES 5 billion threshold, with a steady climb toward the 2029 target.

For large lenders such as KCB Group, Equity Group, DTB, NCBA, and Stanbic, the new requirements are manageable. Smaller Tier 3 banks face tougher choices. Some will raise fresh capital. Others will pursue mergers or acquisitions.

Foreign banks, particularly Nigerian lenders like Access and Zenith, view Kenya as a strategic gateway into East and Central Africa. At the same time, local champions such as Equity and KCB are reinforcing their dominance through acquisitions and regional expansion.

Kenyan banks are also looking beyond national borders. KCB, Equity, and Co-operative Bank are eyeing Ethiopia, while a growing share of profits for KCB, Equity, DTB, I&M, and NCBA now comes from markets like the Democratic Republic of Congo, Uganda, Rwanda, and Tanzania.

Bonds go mainstream

Kenya has made steady progress in democratising access to government securities. The CBK’s DhowCSD platform has simplified the process of buying treasury bills and bonds, making it easier for retail investors to participate.

Commercial banks are following suit. Standard Chartered and KCB Group have integrated bond investment features into their digital banking apps, reducing friction and expanding participation in fixed-income markets.

Credit gets personal

For much of 2024 and 2025, CBK accused banks of failing to transmit monetary policy benefits to borrowers. SMEs, in particular, complained that banks did not understand their businesses or risks.

That argument will lose traction in 2026. CBK-approved risk-based pricing models are now in use, allowing banks to price loans based on transaction history, cash flow patterns, bill payments, and long-term behaviour rather than flat rates.

The era of one-size-fits-all lending rates is ending.

Green money and modern SACCOs

Kenyan banks are increasingly linking green lending to cheaper capital from international climate funds. This is driving lower-cost financing for electric motorcycles, solar irrigation, and clean energy projects, particularly in agriculture.

At the same time, SACCOs are undergoing a quiet transformation. Institutions like Stima Sacco, Mwalimu Sacco, and Kenya Police Sacco have gone fully digital. Loans are instant, savings are real-time, and operational efficiency is improving. In scale and capital strength, the gap between large SACCOs and Tier 2 banks is narrowing.

Nigeria

Nigerian banks spent 2025 preparing for scale after the Central Bank of Nigeria launched the most aggressive recapitalisation drive in over 20 years.

In 2024, the CBN raised minimum capital requirements across the industry, arguing that stronger balance sheets were essential to absorb shocks, restore confidence, and support Nigeria’s ambition of becoming a $1 trillion economy.

By 2025, the sector showed signs of stabilisation. Key financial soundness indicators broadly aligned with prudential benchmarks, supported by strong net interest income, accelerated digital adoption, and ongoing capital raises. So far, 21 banks have met the new requirements.

Under the new framework, international banks must raise paid-up capital to ₦500 billion, national banks to ₦200 billion, regional banks to ₦50 billion, and merchant banks to ₦50 billion. Non-interest banks face lower thresholds depending on their licence scope.

What this means for 2026

With larger capital buffers, Nigerian banks will have greater capacity to underwrite large infrastructure, energy, and manufacturing loans. These sectors are central to the CBN’s productivity and growth agenda.

Stronger balance sheets are also expected to boost investor confidence, attract foreign capital, and support broader credit expansion to SMEs and the real economy.

More ATMs

ATMs are set for a comeback. In late 2025, the CBN signalled a preference for bank-managed cash distribution over heavy reliance on PoS agents. Draft regulations require banks to deploy one ATM for every 5,000 active cards, with phased compliance targets through 2028.

With recapitalisation strengthening balance sheets, ATM expansion is likely to become a key pillar of financial inclusion and cash access in 2026.

Risks remain

Despite stronger capital, risks are still elevated. Non-performing loans stood at around 7% in 2025, above the regulatory threshold. The gradual withdrawal of COVID-era forbearance has exposed weak credits, and further deterioration could constrain lending appetite.

Currency risk also looms. Any sharp depreciation of the naira could reprice foreign currency exposures and strain liquidity, particularly for banks with significant FX obligations.

South Africa

South Africa’s banking sector in 2026 will be shaped by tighter monetary conditions and structural reform. The South African Reserve Bank has increased scrutiny on liquidity and credit exposure as high interest rates and weak growth test resilience.

But the defining shift is structural. Finance is moving from a closed, bank-dominated system to an open, interoperable ecosystem.

Open finance goes mainstream

Following the passage of the National Payments System Bill in 2025, non-banks can now access settlement infrastructure directly. Fintechs such as Stitch, Ozow, and Yoco, alongside mobile operators like Vodacom and MTN, no longer need traditional bank sponsors.

This change is turning banking into an invisible layer embedded in super apps. Platforms like FNB’s ecosystem and Nedbank’s Avo are evolving into marketplaces where users manage payments, shopping, utilities, and services in one place.

Read More: Paystack moves into lending as it acquires Ladder Microfinance Bank

Credit market reset

South Africa is reviewing the prime lending rate, which prices roughly R6.2 trillion in credit. Fixed since 2001 at 350 basis points above the repo rate, the spread may be adjusted or scrapped. If reforms proceed, borrowing costs could fall in 2026, improving access to credit while reshaping bank margins.

Instant payments dominate

Digital payments are becoming the default. PayShap transaction volumes exceeded 44 million per month by August 2025, reinforcing expectations of real-time settlement. SMEs are using instant payments to manage cash flow, while banks face increasing competition from fintechs in BNPL and point-of-sale credit.

SARB is modernising the payments system to ensure interoperability while keeping complexity in the background for users.

African banks enter 2026 with stronger capital and clearer regulatory direction. The challenge now is execution. Balance-sheet strength must translate into productive lending, disciplined risk management, and tangible economic impact.

2025 was about building resilience. 2026 will test whether African banks can deploy that strength at speed, at scale, and with discipline.