Nigerian small and medium-sized enterprises (SMEs) face significant barriers to adopting artificial intelligence (AI), despite growing awareness of the technology and its potential to drive business growth, according to Kehinde Ogundare, Country Head of Zoho Nigeria.
Ogundare said inadequate infrastructure, low digital literacy, skills shortages, and regulatory challenges continue to limit the ability of many SMEs to take advantage of AI-powered solutions.
He noted that while AI is increasingly being discussed as a tool for improving efficiency and competitiveness, the realities facing Nigerian businesses differ significantly from those in more developed markets.
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According to him, many SME owners are focused on managing operating costs, maintaining business continuity, and navigating economic challenges, making affordability and practicality key considerations in technology adoption.
SMEs Remain Critical to Nigeria’s Economy
Ogundare highlighted the economic importance of SMEs, noting that Micro, Small and Medium Enterprises (MSMEs) contributed 46.32 per cent to Nigeria’s Gross Domestic Product (GDP) in 2024.
He added that the sector accounts for 96.9 per cent of businesses and 87.9 per cent of employment in the country, making it a major driver of economic activity and job creation.
Despite their importance, he said research involving 144 Nigerian SMEs found that infrastructure deficits, limited technical skills, and low levels of digital literacy remain major obstacles to meaningful AI adoption.
According to him, awareness of AI is growing among business owners, but many lack access to the tools, resources, and support systems required to deploy the technology effectively.
Subscription-Based Models Improving Access
The Zoho Nigeria executive said subscription-based technology platforms are helping make AI more accessible to small businesses by reducing the need for large upfront investments.
He explained that many SMEs perceive AI as expensive technology requiring significant capital expenditure, specialist consultants, and complex implementation processes.
However, he noted that cloud-based subscription models allow businesses to pay for services on a monthly basis, making advanced technologies more affordable and easier to scale.
Ogundare also pointed to the growing adoption of integrated business platforms that combine functions such as invoicing, customer relationship management, inventory tracking, and analytics.
According to him, such solutions can help businesses reduce costs while improving operational efficiency through built-in AI capabilities.
Infrastructure Challenges Persist
Ogundare identified poor infrastructure as one of the biggest challenges facing AI adoption in Nigeria.
He said limited broadband access, unreliable electricity supply, and high data costs continue to affect businesses seeking to leverage digital technologies.
Citing World Bank estimates, he noted that inadequate electricity supply costs Nigeria’s economy approximately $26.2 billion annually and forces many businesses to rely on costly alternative power sources.
He stressed that AI solutions designed for Nigeria must be tailored to these realities.
According to him, mobile-first technologies that require minimal data and can function in environments with inconsistent internet connectivity are more likely to achieve widespread adoption among SMEs.
“The mobile phone remains the primary business tool for many entrepreneurs. AI solutions must be designed to work effectively within that environment,” he said.
Skills Development Key to Future Growth
Ogundare also emphasized the need for investment in digital skills and workforce development to support wider AI adoption.
He referenced recent research indicating that 64 per cent of African workers already use AI in their workplaces, suggesting a growing readiness for technology-driven transformation across the continent.
According to him, businesses, technology providers, and policymakers must collaborate to expand training and upskilling programmes that equip workers with the knowledge needed to utilize AI effectively.
Call for Localised AI Solutions
The Zoho Nigeria Country Head argued that AI solutions intended for Nigerian SMEs must be developed with local market realities in mind.
He said affordability, low bandwidth requirements, ease of use, and accessibility for non-technical users should remain priorities for technology developers.
Ogundare maintained that while the barriers to AI adoption are significant, they are not insurmountable.
He expressed confidence that with the right infrastructure, pricing models, policy support, and skills development initiatives, AI could play a transformative role in improving productivity and competitiveness among Nigerian SMEs.
Industry stakeholders have continued to advocate for greater investment in digital infrastructure and technology education as part of efforts to accelerate digital transformation and economic growth across the country.
