The application of generative artificial intelligence (AI) is emerging as a promising solution to major economic and social challenges across Africa, according to a new report by consulting firm McKinsey. However, significant investments in infrastructure, talent development, data governance, and regulation are still required to realize this potential.

The report, released on May 12, 2025, estimates that African countries could unlock up to $103 billion in annual economic value through the large-scale deployment of generative AI. Titled "Leading, not lagging: Africa’s gen AI opportunity", the study reveals that over 40% of African organizations, including public institutions and private companies, are already experimenting with or implementing generative AI solutions to address critical regional challenges.

In Kenya, for example, generative AI is being used to create personalized learning paths that improve academic outcomes and student engagement. In South Africa, a local startup is deploying proprietary AI tools, including GPT-4, to help small business owners automate financial reports and dashboards while better managing their operations.

Despite this progress, McKinsey emphasizes that the continent has barely scratched the surface of what both traditional AI and generative AI can deliver. The report explains that traditional AI, systems capable of performing specific tasks based on defined algorithms, still holds considerable value and, when combined with generative AI, could more than double the economic potential currently projected.

According to McKinsey’s model, widespread deployment of generative AI across sectors could unlock between $61 billion and $103 billion in annual value. When combined with traditional AI, the total impact could be significantly greater.

Sectors identified with high economic potential include: retail trade ($6.6 to $10.4 billion annually); telecommunications ($6 to $9.6 billion); packaged goods ($5.4 to $8.9 billion); mining, heavy industry, and energy ($5.3 to $8.5 billion); banking ($4.7 to $7.9 billion)

However, the report cautions that Africa must address critical challenges to fully benefit from generative AI. These include gaps in infrastructure, limited cloud computing access, and a shortage of skilled professionals. Regulatory clarity, improved data quality and availability, and robust frameworks to manage risks, such as privacy breaches, cyberattacks, and job displacement, are also needed.

McKinsey concludes that with the right investments and coordinated policy actions, generative AI could become a powerful driver of inclusive and scalable economic growth across Africa.