Generative AI (gen AI) could unlock up to $100 billion in additional annual economic value for Africa if deployed at scale. This is according to a McKinsey report titled “Leading, not lagging: Africa’s gen AI opportunity”.
During McKinsey’s first-ever media day in Lagos, the research was presented by Mayowa Kuyoro, the global leader of McKinsey’s Fintech Practice and leader of the Financial Services Practice in Africa.
Generative AI refers to a type of artificial intelligence that produces original outputs by identifying patterns in massive datasets and recombining them in a novel way.
Kuyoro noted during her presentation that Africa is at par with the rest of the world in the application of gen AI. She added that over 40 percent of the African institutions surveyed by McKinsey have already started experimenting with Gen AI. Noting that some have gone further by implementing significant solutions.
However, the continent has barely begun to tap the potential of both traditional AI and Gen AI. Together, they could create more than twice the value of Gen AI alone, with traditional AI accounting for at least 60 percent of that value.
According to the research, over half of Gen AI’s economic potential in Africa lies in sectors that already have leading players. These include banking, retail, consumer packaged goods (CPG), telecommunications, insurance, mining, heavy industry, energy, and the public sector, including healthcare.
The research estimated that the use of gen AI in the retail sector could unlock between $6.6 billion and $10 billion in economic value for the continent. According to the research, opportunities in the retail space range from creating next-generation shopping experiences and personalised sales campaigns to improving marketing content and customer insights. Use cases also include store operations and layouts, supplier and merchandising decisions, as well as the entire software development cycle.
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It is also estimated that gen AI could unlock up to $6 billion for the telecoms sector. The report identified use cases such as B2B and B2C marketing and sales through copilots, automated outreach, and personalisation. Other use cases include network issue detection and resolution with Gen AI.
The report highlighted that most African banks are keeping their Gen AI initiatives at the proof-of-concept stage, with few advancing to full-scale deployment. Yet, McKinsey’s analysis suggests that applying Gen AI across the banking value chain could unlock between $4.7 billion and $7.9 billion in economic value for the sector.