Artificial intelligence (AI) is reshaping key industries in Africa, including finance, healthcare, agriculture, energy, and urban development. Africa’s AI market is projected to grow from US$4.5 billion in 2025 to US$16.5 billion, marking a 27.42% annual increase, according to a new paper by Mastercard. This growth will be driven by opportunities for economic growth, increased productivity, and expanded access to essential services, including financial services.

The whitepaper, released earlier this month, highlights AI’s transformative potential across major industries, particularly in job creation where it is expected to create up to 230 million digital jobs projected in Sub-Saharan Africa by 2030. It also highlights improved financial access, and service delivery as key advancements delivered by AI, sharing insights from key markets including South Africa, Kenya, and Nigeria.

Finance: AI at the forefront

According to the report, the financial services sector has so far seen the greatest impact of AI-backed tools. AI-driven models assess the creditworthiness of those without traditional credit histories by evaluating alternative data sources, promoting financial inclusion.

In Kenya, Tala analyzes mobile phone usage and payment behavior, which then helps make it easier for customers to be approved for micro-loans. Similarly, Jumo, a banking-as-a-service platform operating out of Ghana, Tanzania, Kenya, Uganda, Zambia, Côte d’Ivoire, and South Africa, uses AI and machine learning (ML) to create tailored financial products for the underbanked.

In Sub-Saharan Africa alone, over 400 million are still financially unserved or underserved, highlighting the vast potential of AI-driven solutions.

AI is also used in chatbots and virtual assistants, offering faster, around-the clock support, improving user experience and reducing operational costs.

For example, Kudi.ai, based out of Nigeria, offers AI-powered conversational banking via chatbots on platforms like Facebook Messenger and Telegram, letting users perform basic financial tasks such as bill payments, airtime purchases, money transfers, and account reminders.

The South African Absa Group has introduced virtual assistant Absa Abby, which uses natural processing language (NLP) to handle customer queries and guide users through basic banking tasks.

Beyond inclusion and service, AI is also enhancing security and regulatory compliance, helping financial institutions like Absa Group in South Africa, Equity Group in Kenya, and Mauritius Commercial Bank better protect their customers while meeting increasingly stringent regulatory requirements.

Booming investment in Africa’s AI ecosystem

Africa’s burgeoning AI ecosystem is supported by significant investments and partnerships. In 2023 alone, AI-focused startups attracted US$610 million in venture capital (VC) in South Africa, US$218 million in Nigeria, and US$15 million in Kenya in 2023.

Global giants are also making bold moves. Google has pledged US$1 billion to support digital transformation in Africa, including landing a subsea cable into the continent to enable faster internet speeds, low-interest loans for small businesses, equity investments into African startups, and skills training.

In Nigeria, Google.org has awarded NGN 2.8 billion (US$1.8 million) to Data Science Nigeria to boost AI talent development, focusing on upskilling 20,000 young Nigerians with technical skills in data science and AI, and equipping 25,000 educators with the tools and resources to teach 125,000 young people about AI, inspiring the next generation of AI innovators.

Similarly in Kenya, Microsoft announced last year a US$1 billion partnership with G42, which includes the establishment of green data center, and skills development initiatives. The Africa Center of Competence for Digital and AI Skilling, launched that same year at the Kenya School of Government in collaboration with the Ministry of Information, Communications and the Digital Economy, and the United Nations Development Programme (UNDP), aims to train 300,000 public servants.

Separately, Microsoft has also committed to training 1 million Kenyans in AI and cybersecurity through its AI National Skilling Initiative (AINSI).

Furthermore, research hubs like the Artificial Intelligence Institute of South Africa (AIISA) and the Morocco International Center for AI are fostering AI innovation. The AIISA was launched in 2022 by the Department of Communications and Digital Technologies, the University of Johannesburg, and the Tshwane University of Technology. The center aims to foster collaboration between public services, private companies, and academic institutions.

In Morocco, the International Center for AI was inaugurated in 2022 as well, a hub dedicated to advancing local expertise in AI and data science.

Data, infrastructure gaps among top challenges

Despite strong opportunities, Africa faces a complex landscape for AI adoption, marked by infrastructure gaps, limited expertise, and the need to adapt solutions to local contexts.

One of the most pressing issues relates to data. African data ecosystems are still in their early stages, and many systems still rely on imported algorithms developed and trained on foreign datasets, which may not reflect the unique characteristics of African populations. In East Africa, government agencies often depend on manual processes, which results in incomplete, inaccurate, or outdated data. Datasets are also fragmented across multiple platforms and repositories, making them difficult to access and use effectively.

Another significant barrier is infrastructure, with cloud computing and data center access remaining limited across the continent.

Currently, the Middle East and Africa (MEA) region accounts for just 9% of global cloud computing market, compared to 39% in North America, 25% in Europe, and 21% in Asia-Pacific. However, while cloud computing adoption in Africa is growing faster than other regions at an annual rate of 25% to 30%, data center capacity is also significantly underdeveloped compared to global standards. More than two-thirds of Africa’s capacity is concentrated in South Africa, with countries like Egypt, Nigeria, Kenya, and Morocco also having larger concentrations of facilities compared to the rest of the continent.

South Africa, Nigeria, Kenya emerge as regional leaders

The report also shares regional highlights, identifying South Africa, Nigeria and Kenya among Africa’s leading markets shaping the AI landscape.

South Africa is regarded as the leader in AI infrastructure, boasting the highest data and infrastructure readiness in Africa. The country is also solidifying its role as a continental leader in AI research and application, with national plans aiming to develop up to 300 AI startups and train 5,000 AI professionals by 2030. South Africa’s AI market is projected to reach US$1.2 billion in 2025.

Meanwhile, Nigeria is emerging as a hub for AI-driven innovation across sectors including payments, security, hospital management, agriculture, and travel. The finance industry has been particularly active in integrating AI, with 13 Deposit Money Banks in Nigeria having incorporated AI-powered chatbots as of February 2024.

Finally, Kenya is positioning itself as a regional leader in safe, inclusive, and trustworthy AI adoption, with a strategic emphasis on supporting the startup ecosystem through a network of incubators, innovation hubs, and professional associations. Kenya’s National AI Strategy 2025, launched in March, outlines AI’s role in broadening financial access, particularly through mobile money.

Edited by Fintech News Africa, based on image by thanyakij-12 via Freepik