Navigating the Digital Divide: An Assessment of AI Adoption Challenges and Strategic Management Frameworks for Small and Medium Enterprises (SMEs) in Nigeria

Abstract

This systematic review examines the state of artificial intelligence (AI) adoption among small and medium enterprises (SMEs) in Nigeria, identifies principal barriers to adoption, and proposes a pragmatic strategic management framework tailored to Nigeria’s resource environment. We conducted a structured search across Google Scholar, Scopus and Web of Science and screened publications from 2018–2025. 27 peer-reviewed studies and 4 policy/industry reports met inclusion criteria and were synthesised thematically. Findings show that AI adoption in Nigerian SMEs is uneven: digitally enabled firms in fintech and ecommerce are experimenting with chatbots, recommendation systems and automation, while many SMEs lack the basic digital foundations required for scalable AI. The dominant barriers are unreliable digital infrastructure and power, limited data readiness, shortage of AI skills, scarce SME-targeted financing, and regulatory uncertainty. Contradictory evidence indicates that, in contexts where data systems and managerial capacity already exist, modest AI interventions delivered measurable benefits; however, when foundational systems are weak, AI adoption yields minimal gains and can even misallocate scarce resources. The paper concludes with a three-pillar strategic framework—digital capability development, organisational readiness, and ecosystem support alongside practical, staged actions for managers, vendors and policymakers. The review highlights research gaps and recommends pilot evaluations, longitudinal studies and cost–benefit analyses specific to Nigerian SMEs.