Why East Africa's SMEs
Are the Next Big Investment Opportunity
A deep dive into the state of African economies and their promising future.
Investors globally are on the hunt for high growth markets to diversify portfolios and secure outsized returns. One region that is steadily climbing the radar is East Africa, a region buzzing with innovation and a booming micro, small and medium-sized enterprises (MSMEs) sector. According to the latest from Mastercard and Visa Accelerator reports, Kenya stands out as a regional leader, driven by its thriving entrepreneurial landscape and high scalability potential.
Beneath Africa’s vibrant markets and lively streets lies a powerful and often underestimated force: MSMEs. Often overlooked, these businesses form the economic backbone of the continent, creating jobs, driving innovation, and quietly generating billions.
Take Nigeria, home to a staggering 41.5 million MSMEs, which fuels over 50% of Nigeria's GDP and supports 76% of its workforce. In South Africa, 2.4 million MSMEs drive 34% of GDP and provide 68% of all jobs.
But then there’s Kenya. With 7.41 million MSMEs, Kenya’s MSME sector contributes 40% of GDP and employs an incredible 93% of the workforce — the highest percentage across all three countries. The productivity of MSMEs is among the lowest in emerging markets, leaving substantial room for growth. Closing the productivity gap between MSMEs and large enterprises could unlock businesses to operate closer to their full potential.
The Untold Story of Kenya’s MSME’s
Kenya processes about $84 billion in commercial payments annually, but a significant portion of the market is packed with informal businesses and unmet financial needs —revealing that the market is both bustling and underserved.
The country is home to more than 5 million unregistered businesses.These enterprises operate outside the formal financial system, meaning no access to traditional banking and limited ability to secure capital, yet, they collectively move over $80 billion every year. Less than $9.2 billion of that flows through card payments, but the rest relies on mobile money, cash transactions, and community-based trust systems. This isn’t a gap. It’s a gateway into a brewing powerhouse at the heart of Africa’s economic future.
So what does this mean for investors? In short: massive opportunity.
The disconnect between informal business activity and formal financial access is generating strong tailwinds for fintech, mobile money platforms, and digital banking solutions.
As global investors look towards emerging markets Sub-Saharan Africa stands out through their technological advances and the need for improved financial solutions. Kenya has led the way on digital finance with products like M-Pesa, the mobile financial platform that revolutionized digital payments and became a case study in fintech innovation. What began as a simple tool for sending money has evolved into a full-scale digital finance ecosystem.
At Deyabo, we invest in smart, scalable ventures that unleash underserved markets and deliver long-term impact. We see the millions of MSMEs across East Africa as a powerful foundation for growth and value creation for millions of entrepreneurs ready to scale.
If you’re looking for the next frontier, look East. From across sectors and essential services such as healthcare and agriculture, the region is filled with innovation, and hunger for growth. Don’t just watch East Africa rise. Be part of it.
References:
Mckinsey. (2024). A microscope on small businesses: Spotting opportunities to boost productivity. https://www.mckinsey.com/mgi/our-research/a-microscope-on-small-businesses-spotting-opportunities-to-boost-productivity#/
Murugaboopathy, P. (2025). Global investors flock to ex-US markets for better growth, valuations. Reuters. https://www.reuters.com/business/global-markets-funds-2025-08-13/
Visa. (2022). The Rise of Small and Medium Sized Enterprises (SMEs) [PDF]. https://km.visamiddleeast.com/content/dam/VCOM/regional/cemea/genericmena/media-kits/documents/vca-the-rise-of-smes-paper-s8.pdf
