As 2025 draws near, the landscape of Nigerian small and medium-sized enterprises (SMEs) is poised for significant transformation through artificial intelligence (AI). The question remains: can AI bridge the gaps and unlock the full potential of these businesses, or will persistent challenges stall progress?
Nigeria’s growing role in Africa’s digital economy underscores the transformative potential of artificial intelligence (AI) for small and medium-sized enterprises (SMEs). By 2025, AI is expected to not only boost productivity but also redefine operational strategies in key sectors such as agriculture, retail, and financial services. Despite these prospects, the journey toward widespread AI adoption presents a mix of opportunities and hurdles for small business owners, policymakers, and the broader economy.
Opportunities and concerns among small business owners For many Nigerian entrepreneurs, AI offers an exciting opportunity to streamline operations and boost growth. For business owners, AI-powered tools are helping them automate inventory management, improve customer targeting, and optimise supply chains. However, significant concerns remain. The high cost of AI tools and the inadequate digital skills of many business owners are major barriers. Infrastructure issues—such as unreliable electricity and limited internet access—further complicate adoption. Without targeted support, many SMEs fear they could be left behind in the race for digital transformation.
Predicted trends in AI for Nigerian SMEs
Technology experts are optimistic about the role of AI in Nigerian SMEs by 2025. In agriculture, AI could revolutionise farming through tools that enable precision farming, weather prediction, and crop disease management. Retailers may use AI-driven analytics to personalise shopping experiences and optimise stock levels, reducing waste and meeting customer demand more effectively. Meanwhile, the fintech sector, a cornerstone of Nigeria’s digital economy, is expected to leverage AI for fraud detection, credit scoring, and expanding financial inclusion.
“AI adoption isn’t just about the technology, It’s about creating an ecosystem where these tools are accessible, affordable, and applicable to local business challenges.”
Economic contributions of smes and AI’s potential impact
According to the NBS/SMEDAN MSME 2021 survey report, SMEs contributed 46.32% to GDP and employing a significant portion of the population. Economists
believe that AI could drive even greater contributions by enabling businesses to scale more efficiently and compete in global markets. However, challenges such as limited funding, low digital literacy, and the informal nature of many SMEs must be addressed.
For instance, agricultural SMEs could benefit immensely from AI, especially given Nigeria’s reliance on farming for food security and economic stability. Tools that monitor crop health, predict yields, and optimise distribution channels could significantly reduce losses and improve profitability. Similarly, retailers adopting AI to analyse consumer data could better anticipate trends and enhance customer loyalty.
Government initiatives and policy frameworks
The Nigerian government has recognised the importance of ICT in fostering economic growth. Initiatives such as the National Digital Economy Policy and Strategy (NDEPS) highlight the country’s commitment to digital transformation. Policymakers are also exploring partnerships with international tech firms to bring affordable AI solutions to SMEs.
However, regulatory challenges persist. Ethical concerns around AI, such as data privacy and cybersecurity risks, remain unresolved.
Real-life examples of AI adoption
Some Nigerian businesses are already using AI to achieve remarkable results. For example, Agri Grow. They provide farmers with the ability to access valuable information about the status and potential of their land. With this platform, farmers can monitor weather conditions, soil composition, moisture levels, and other important parameters, and receive recommendations to optimize production processes. Similarly, fintech platforms like Carbon and Lidya are using AI to offer tailored credit solutions to SMEs by analysing alternative data such as mobile payment records and social media activity. These examples illustrate the transformative potential of AI, even as broader challenges persist.
Cultural and infrastructural factors influencing AI adoption
Nigeria’s unique cultural and infrastructural landscape significantly impacts AI adoption. Many SMEs operate informally, and convincing these businesses to embrace AI requires clear demonstrations of return on investment (ROI). Additionally, digital literacy remains a challenge, particularly in rural areas where awareness of AI tools is low.
Infrastructure issues, such as frequent power outages and limited internet penetration, also hinder adoption. While some businesses have turned to solar power and alternative internet solutions, widespread adoption will require systemic improvements.
Transforming key industries with AI
Agriculture: AI-powered tools for crop monitoring, pest control, and predictive analytics could revolutionise farming, improving food security and profitability for smallholder farmers.
Retail: Machine learning algorithms for customer analytics and supply chain management could help retailers reduce waste and increase efficiency.
Financial Services: AI could expand financial inclusion by providing credit access to underserved populations and improving fraud detection mechanisms.
Recommendations for smes and stakeholders
For Nigerian SMEs, taking the first steps towards AI adoption can seem daunting. However, experts recommend the following strategies:
Start Small: Identify specific pain points where AI can provide immediate value, such as automating repetitive tasks or improving customer service.
Leverage Free and Affordable Tools: Explore open-source AI solutions and low-cost platforms
tailored to small businesses.
Invest in Training: Equip employees with basic digital skills to maximise the benefits of AI tools.
To support SMEs in this journey, stakeholders must take decisive action:
Government: Provide sub- sidies or tax incentives for AI adoption and invest in digital infrastructure such as reliable electricity and broadband access.
Private Sector: Develop affordable, locally relevant AI solutions for SMEs.
Academia: Offer AI-focused training programmes and research to build local expertise.
International Organisations: Partner with Nigerian businesses to fund pilot projects and share best practices.
Conclusion
AI holds immense promise for Nigerian SMEs, with the potential to drive growth, innovation, and economic resilience. However, realising this potential will require a concerted effort from all stakeholders. By addressing barriers such as high costs, low digital literacy, and infrastructural limitations, Nigeria can unlock the transformative power of AI and secure a brighter future for its small businesses by 2025. The time to act is now.
Olufemi Oluoje, is a seasoned AI consultant and software developer with over 8 years of experience delivering innovative tech solutions to organisations and specialises in helping small businesses harness AI to boost productivity, reduce costs, and drive profitability. Olufemi focuses on creating tailored AI-powered solutions for SMEs and offers training to help teams effectively adopt AI. For inquiries, contact hello@aiforsme.ng, aolu- femi.oluoje@gmail.com.
