McKinsey & Company's latest report "Leading, not lagging: Africa’s gen AI opportunity" reveals that generative AI (gen AI) has the potential to unlock between $61 billion and $103 billion in economic value across various sectors in Africa.
A collaborative effort from McKinsey’s offices in Lagos, Johannesburg, and Casablanca has culminated in a groundbreaking report on applying generative AI and artificial intelligence (AI) within Africa and its institutions.
The report highlights that while many gen AI applications are still in experimental or developmental stages, several organizations have successfully implemented AI and gen AI at scale, transforming their workflows.
For instance, a mobile telecommunications provider in Nigeria has been scaling a chatbot that acts as a digital assistant to enhance customer experience. This chatbot can answer questions, provide personalized recommendations, offer 24/7 access to information, and assist customers with product activation, balance inquiries, and airtime purchases.
Similarly, financial services providers in South Africa have been utilizing generative AI to hyper-personalize their outbound sales campaigns and reduce internal time to market.
The McKinsey report emphasizes Africa's ability to leverage technology to leapfrog traditional pathways, citing examples such as mobile technology overcoming the fixed-line internet gap, mobile payments gaining traction in Kenya, and several African institutions rapidly adopting cloud technologies, often faster than their counterparts in developed markets.
The report asserts that Africa has quickly embraced generative AI, with many innovative applications and deployments already in progress.
According to McKinsey, over 40 percent of institutions on the continent have either begun experimenting with gen AI or have implemented significant solutions. However, the report notes that the continent has only scratched the surface of what’s possible with AI and generative AI.
If institutions can overcome existing barriers and focus on scalable solutions, McKinsey's analysis suggests African economies could unlock up to $100 billion annually across multiple sectors from gen AI alone.
This potential is in addition to the untapped possibilities from traditional AI and machine learning (ML). The total combined value from conventional AI and gen AI exceeds double what gen AI alone can achieve, with conventional AI contributing at least 60 percent of that value.
McKinsey estimates that generative AI could add between $2.6 trillion and $4.4 trillion annually to the global economy across 63 analyzed use cases.
Many organizations are employing generative AI to innovatively tackle some of Africa’s most pressing challenges.
- For example, AI-driven translation services are being utilized to improve communication in underrepresented local languages, such as Amharic, enhancing access to information and fostering social cohesion.
- In Kenya, generative AI creates personalized learning pathways that improve student performance and engagement through tailored educational experiences.
- In South Africa, a local startup employs proprietary AI models and tools to assist small-business owners in gaining a better understanding of their finances, automating the generation of user-friendly reports and dashboards.
- The adoption of generative AI varies significantly by sector. More digitally mature sectors, such as technology, telecommunications, and financial services, have the highest AI and gen AI adoption levels.
Every day, use cases in these sectors are advancing beyond merely providing copilot licenses to employees—there is a focused effort on enhancing productivity and refining customer and employee experiences.
However, relatively few organizations have implemented software engineering use cases at scale throughout the software development life cycle or tested agentic AI with autonomous agents.
As such, substantial value remains untapped. It is estimated that the large-scale deployment of gen AI could unlock an additional $61 billion to $103 billion of economic value across African sectors.