AI Can Help Nigerian SMEs Cut Costs, Boost Competitiveness — Research

Artificial Intelligence (AI) has emerged as a strategic tool that Nigerian small and medium-sized enterprises (SMEs) can deploy to improve productivity, cut operating costs and strengthen their competitiveness.

According to a new study by Dr Ayodeji Idowu, published in the International Journal of Comparative Studies in International Relations and Development, noted that developments in cloud computing, affordable digital platforms and application programming interfaces (APIs) have lowered the barriers to AI adoption, making the technology increasingly accessible to smaller businesses.

The researcher said SMEs no longer need huge investments or specialised data science teams to deploy AI solutions across areas such as customer service, marketing, finance and business operations.

The study said AI could automate customer support, analyse marketing trends, improve inventory management and power accounting systems capable of reducing manual errors and supporting better business decisions.

It added that logistics companies could use AI to optimise delivery routes, reduce fuel consumption and improve operational efficiency, while retailers could deploy predictive analytics to better understand consumer behaviour and improve sales.

However, the research cited international examples of businesses that have benefited from AI adoption and noted that TKG, a German family-owned manufacturing company, cut order-processing time by more than 50 per cent after integrating AI into its operations and recovered its investment in less than three years.

It further cited cases where retailers using AI-powered predictive analytics recorded sales increases of about 25 per cent within a quarter.

Dr Idowu identified inadequate digital skills, misconceptions about implementation costs, poor electricity supply, unreliable internet connectivity and resistance to replacing traditional processes as major barriers to AI adoption among Nigerian SMEs.

The study found that about 65 per cent of SMEs consider limited technical expertise their biggest obstacle to adopting digital technologies.

Idowu noted that to overcome the challenges, he recommended a phased approach to AI adoption, beginning with understanding the business value of the technology and deploying affordable, off-the-shelf solutions.

He further advised SMEs to prioritise areas with the greatest potential impact, automate repetitive administrative tasks, improve employees’ digital literacy, and gradually move towards customised AI solutions as their digital capabilities improve.

The scholar called for stronger collaboration among government, technology companies, educational institutions and business owners to accelerate AI adoption across the SME sector.

He urged policymakers to introduce grants, tax incentives and low-interest technology loans to help smaller businesses invest in digital technologies.

The study further encouraged SMEs to maintain accurate digital records, noting that quality business data would become increasingly important as companies adopt more advanced AI applications.

While acknowledging the significant role SMEs play in Nigeria’s economy, the researcher argued that strategic AI adoption could help businesses improve efficiency, strengthen customer relationships, and compete more effectively as the country’s economy becomes increasingly digital.