How Nigerian SMEs Can Use AI to Grow and Stay Competitive

Artificial Intelligence is no longer a technology reserved for multinational corporations.

For Nigerian small and medium-sized enterprises (SMEs), AI is increasingly becoming a practical business tool that can help reduce costs, improve productivity, serve customers better and compete in a fast-changing digital economy.

A new study by Dr. Ayodeji Idowu, published in the International Journal of Comparative Studies in International Relations and Development, highlights how Nigerian SMEs can begin using AI without making huge investments or hiring specialised data science teams.

The study notes that cloud computing, affordable digital platforms and application programming interfaces (APIs) have made AI tools more accessible to businesses of different sizes.

Where can SMEs use AI?

AI can already support several everyday business functions.

Businesses can use AI-powered tools to automate customer support, analyse customer behaviour, improve marketing campaigns, manage inventory and support accounting processes.

For logistics businesses, AI can help optimise delivery routes, reduce fuel consumption and improve operational efficiency.

The technology can also take over repetitive administrative tasks, freeing business owners and employees to focus on activities that require human judgement and creativity.

The study highlighted global examples of businesses that have benefited from AI adoption. One example is TKG, a German family-owned manufacturing company that reportedly cut order-processing time by more than 50 percent after integrating AI into its operations and recovered its investment in less than three years.

It also cited retailers that recorded sales increases of about 25 percent within a quarter after using AI-powered predictive analytics.

Why are Nigerian SMEs still hesitant?

Despite the opportunities, adoption remains slow.

The study identified several challenges, including perceptions that AI is expensive, limited digital skills, unreliable electricity and internet connectivity, and resistance to moving away from traditional manual processes.

About 65 percent of SMEs reportedly consider limited technical expertise their biggest obstacle to adopting digital technologies.

But businesses do not necessarily need to start with complicated AI systems.

A practical way to start

Dr. Ayodeji recommends a phased six-step approach:

1. Understand where AI can create value for the business.
2. Start with affordable, ready-made AI tools.
3. Focus first on business areas where AI can have the biggest impact.
4. Automate repetitive administrative tasks.
5. Improve employees’ digital skills.
6. Gradually move towards customised AI solutions as the business becomes more digitally mature.

The researcher also called for stronger collaboration between government, technology companies, educational institutions and businesses to accelerate AI adoption.

Government support through grants, tax incentives and low-interest technology loans could help more SMEs invest in digital tools.

For business owners, another important step is keeping proper digital records. Good-quality business data today could become a valuable foundation for AI applications tomorrow.

The bigger picture

AI should not be viewed simply as another technology trend.

For Nigerian SMEs, it can become a tool for doing more with limited resources, understanding customers better, cutting unnecessary costs and making faster, data-driven decisions.

The businesses that start experimenting with AI strategically today may have a significant advantage as Nigeria’s economy becomes increasingly digital.

The question for SMEs is no longer just, “Can my business afford AI?”

It is also: “Can my business afford to ignore it?”