IMPACT OF ARTIFICIAL INTELLIGENCE (AI) ON THE GROWTH OF STARTUPS IN NIGERIA

Abstract

The rapid adoption of Artificial Intelligence (AI) has significantly influenced the global business landscape, and its impact on startups is particularly pronounced. This study examines the role of AI in driving the economic growth of startup companies in Nigeria, a country with a burgeoning entepreneurial ecosystem but limited technological infrastructure. Grounded in Schumpeter’s Theory of Innovation, this paper explores how AI technologies enhance productivity, operational efficiency, and market competitiveness for Nigerian startups. A mixed-method approach was employed, combining quantitative surveys and qualitative case studies. Data were collected from 50 startups across various sectors, including fintech, healthtech, and agritech, that have integrated AI into their operations. The quantitative data was sourced through interviews. While existing literature was utilized as secondary data. The findings reveal that startups that implement AI technologies experience faster growth with a 25% higher growth rate in revenue, enhanced operational efficiency, and improved customer engagement compared to non-AI adopting startups. AI adoption, however, remains concentrated in a few industries due to infrastructural and financial constraints, with fintech leading in AI integration. Despite these challenges, the potential for AI to spur economic growth in Nigeria’s startup sector is evident. The study recommends that the Nigerian government, investors, and stakeholders develop a supportive ecosystem for AI innovation by improving digital infrastructure, offering tax incentives, and fostering public-private partnerships to boost AI training and capacity building. Furthermore, startups should leverage AI to scale operations and remain competitive in the fast-evolving global market.