AI- DRIVEN ENTREPRENEURSHIP IN NIGERIA'S INFORMAL SECTOR: OPPORTUNITIES AND CHALLENGES

Abstract

This study explores the emerging phenomenon of AI-driven entrepreneurship in Nigeria's informal sector, focusing on the opportunities it presents and the challenges impeding its integration. The aim is to assess how artificial intelligence (AI) technologies are being adopted by informal sector entrepreneurs and to identify the socio-economic and infrastructural barriers limiting their full potential. The objectives include evaluating the level of awareness and utilization of AI tools among informal entrepreneurs, examining the impact of AI on productivity, income generation, and business sustainability, and analyzing policy and infrastructural constraints. Using a mixed-method approach, quantitative data were gathered from 450 respondents across five major informal markets in Lagos, Kano, Onitsha, Aba, and Ibadan, while qualitative insights were drawn from 25 in-depth interviews. Descriptive and inferential statistics revealed that only 28.4% of respondents use basic AI tools (e.g., chatbots, mobile-based inventory systems), with usage correlated positively with education level (p < 0.05). Notably, AI adoption led to a 19% average increase in sales turnover and a 23% reduction in operational costs among adopters. However, challenges identified include digital illiteracy (47.6%), erratic power supply (61.2%), and limited internet access (39.4%). The study concludes that while AI presents transformative opportunities for Nigeria's informal economy, strategic investments in digital infrastructure, inclusive AI training, and supportive policies are imperative. AI adoption in the informal sector can catalyze inclusive economic growth if barriers are addressed holistically.