Nigeria’s AI Sector Shows Promising Growth

• With substantial funding and a robust talent pool, Nigeria is poised for AI-driven economic transformation

  

AI is already transforming industries and starting to reshape economies and is poised to profoundly shape the future of economic development over the next few years. The expansive scale of this growth makes AI an economic priority in every region around the globe. However, new Boston Consulting Group (BCG) research has established that most economies are underprepared for AI-driven disruption. The study shows that over 70% of the economies studied score below average in critical areas such as ecosystem participation, skills, and research and development.

BCG’s AI Maturity Matrix, a first of its kind study, offers a comprehensive overview of the AI landscape across 73 economies by focusing on two pivotal aspects. First, it assesses each economy’s vulnerability to AI-driven shifts, such as job displacement and industrywide productivity gains. Second, it evaluates the preparedness of each economy to navigate the risks associated with AI, while leveraging its potential to stimulate economic growth.

The report then offers recommendations tailored to the diverse groups to guide policymakers and provides an interactive dashboard for a more detailed exploration of the analysis.

This first-of-its-kind study offers a broad view of global adoption, revealing that while most economies are gradually embracing AI, a small influential group of pioneers is emerging as global leaders. This handful of leading markets stand to gain significant economic advantages and are uniquely positioned to shape how humanity will engage with this transformative technology.

Six sectors are most exposed to AI-driven changes

According to the report, there are six sectors that are most exposed to AI-driven change: information and communication, high-tech goods, retail, financial services, public services, and motor vehicle manufacturing. Economies with a high share of sectors that are most exposed to AI are among the world’s most exposed to disruption. These include Luxembourg (with financial services making up almost 30% of GDP), Hong Kong (22% financial services and 22% business services), and Singapore (18% business services, 16% retail, 14% financial services).

Nigeria’s GDP is composed of sectors with both high and limited exposure to AI. Those with high exposure – retail & wholesale and information & communication constitute a large share of the country’s GDP which comprise of 18% and 17% respectively. Whilst the country’s largest sector, agriculture, forestry & fishery which makes up 23% of the economy has limited AI exposure.

This aligns with the wider report findings that shows that economies with industry sectors that are less susceptible to AI disruption are less exposed. Such sectors include construction, agriculture, and furniture manufacturing; countries include Indonesia (13% agriculture and 11% construction of GDP), India (17% agriculture and 8% construction), and Ethiopia (36% agriculture).

Measuring AI readiness using the ASPIRE Index

“Readiness” for AI refers to an economy’s ability to effectively implement and integrate AI. The study measures readiness across the six dimensions that make up BCG’s ASPIRE index: Ambition, Skills, Policy and regulation, Investment, Research and innovation, and Ecosystem.

When measured against the index for AI readiness compared to the average of other sample economies in sub-Saharan Africa, Nigeria notably has the highest value for funding provided to AI companies (investment), the 2nd highest number of AI specialists (skills) and the 2nd highest value for the composite index for research papers published in AI (research and Innovation). South Africa leads in Sub-Saharan Africa in both second place instances.

Of the 73 economies assessed, only five—categorised as AI pioneers—have achieved a high level of readiness. In skills, the US and Singapore stand out with robust AI talent pools, crucial for driving innovation. The US leads in investing, driven by its sophisticated capital markets and the abundance of AI unicorns. In the R&D race, Mainland China is leading in patents and AI academic papers.

Six Distinct Archetypes of AI Adoption

The combined analysis of AI exposure and readiness reveals six distinct adoption groups:

• AI Pioneers: These are the vanguards of AI adoption, building on strong infrastructure and engaging the technology in diverse sectors. All pioneers invest liberally in R&D and job sectors, and education systems are full of highly skilled talent. AI will make up progressively larger shares of the pioneers’ GDPs over the next several years, as these actors supply more and more AI technologies, services, skills, and investment to the world.
• Steady Contenders: These economies have higher shares of highly exposed service sectors; however, their exposure is balanced by high readiness. This group is mainly dominated by high-income European economies like Germany, which has high exposure due to its large information and communication technology (ICT) and advanced manufacturing sectors. Malaysia stands out as a non-European leader.
• Rising Contenders: These are economies with lower AI exposure due to a relatively higher share of industrial and/or resource-based mix of sectors. This lower level of exposure is the main difference between rising contenders and steady contenders, but governments in this subgroup push for AI adoption with the same commitment as steady contenders. India, Saudi Arabia, and Indonesia are notable examples here.
• Gradual Practitioners: These are typically upper middle- and lower middle-income countries that are adopting AI at a moderate pace. Their economies include low-tech sectors such as tourism, textiles, wood manufacturing, and agriculture, where adopting AI is not yet imperative for companies. In Africa Egypt, Kenya, Morocco and South Africa fall into this category.
• Exposed Practitioners.This group includes developing and developed economies vulnerable to AI disruption due to more high-exposure sectors and low readiness. Actors here will need to accelerate AI adoption and mitigate potential risks. Notable economies in this group include Malta, Cyprus, Bahrain, Kuwait, Greece, and Bulgaria.
• AI Emergents: These economies are at the early stages of AI adoption. They need to build foundational strategies and infrastructure to reach the basic levels of AI integration and competitiveness. These countries lack a national AI strategy or similar holistic approaches to AI. Nigeria falls within this category in terms of its AI adoption, positioning the country’s economy as being below the median for exposure to, and readiness for AI. Other African countries included here are Angola and Ethiopia.

Positioning governments for success in the AI-driven future

The report proposes a set of initiatives for each archetype across three themes:

• Enabling AI:establishing the foundational elements for AI emergent
• Accelerating AI:customising the ASPIRE levers for AI contenders and AI practitioners
• Amplifying AI:driving the global AI agenda for AI pioneers

While Nigeria’s AI readiness has some challenges, the strong investor confidence and potential for scaling AI initiative as demonstrated in the funding provided to AI companies coupled with the growing talent base in AI specialists provide a strong foundation on which the country can build its AI capabilities and future growth and adoption.

These recommendations offer an economywide approach to AI readiness that economic managers can apply to drive sectoral transformation.

Download the publication here.

Access the interactive dashboard here to easily view AI engagement and explore factors like sector deployment, exposure, investment, regulation, and readiness for disruption across the economies studied.