Conceptualising the AI-Ready SME: A Digital Transformation Framework to Achieve AU Agenda 2063's Inclusive Growth and Industrialisation Goals

AbstractThe African Union’s Agenda 2063 aims for inclusive growth and an accelerated pace ofindustrialisation. However, small and medium-sized businesses (SMEs), which are at theheart of Africa’s economy, are hindered by multiple factors in developing, deploying, andusing artificial intelligence (AI) to dramatically improve performance. This conceptualanalysis paper examines a key missing piece of the puzzle at the intersection of digitaltransformation, AI, and Africa’s development. The paper contributes new knowledge andcloses the knowledge gap through the ‘AI-Ready SME’ proposition. This proposition takes aholistic approach to transforming organisations, covering how well they use data, their digitalsetup, leaders who can adapt, understanding of AI, and a sound ethical approach that alignswith local social and economic realities. Using the idea of ‘dynamic capabilities’ and ways ofinnovating that include everyone, the paper proposes a step-by-step process for digitaltransformation, from getting the basic digital elements in place to using AI to improve howthings are done. This specifically focuses on being something SMEs with limited funds canafford, grow, and withstand difficulties. The paper asserts that, if Agenda 2063 is to beachieved, there is an imperative to move beyond numerous small, isolated AI trials andinstead build a broaderpreparationsystem. This system would include groups of SMEs andfinancial technology companies, government support through incentives, and collaborationsto improve skills. The paper contributes a multi-faceted ‘readiness index’ to measure thepotential for AI across different sectors of African SMEs, a practical plan to put things inplace that balances using AI to automate tasks and creating jobs as the industry grows, andideas for future research. The framework offers practical advice for policymakers,organisations providing development funding, and those who support SMEs; it aims to spreadthe benefits of AI and reduce the risk of exclusion. This paper views AI as a means to supportAfrica’s fundamental transformation and more equitable wealth distribution, and places SMEpreparation at its centre so it’s not a source of disruption.