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UNIDO’s Report Explains the Potential and Status of AI among SMEs

The UNIDO publication marks a departure from previous work in this field, as it engages with the issue of absorption and application of advanced technology from the perspective of SMEs in developing countries.

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Further to its participation in the United Nations High Level Inter-Agency Working Group on Artificial Intelligence, the United Nations Industrial Development Organization (UNIDO) has developed a new normative document, Empowering SMEs of Developing Countries through 4IR Technologies-Artificial Intelligence. The publication provides guidance both to small and medium enterprises (SMEs) in developing countries, and to business development services institutions, to help facilitate the adoption and application of artificial intelligence (AI) in their respective contexts.

Globally, SMEs are especially challenged in terms of the Fourth Industrial Revolution (4IR) and accessing its associated technologies due to a confluence of factors, such as issues obtaining credit and finance; insufficient knowledge; a lack of qualified labour; inadequate digital infrastructure; and uncertainty about how to integrate advanced technology into business operations.

The UNIDO publication marks a departure from previous work in this field, as it engages with the issue of absorption and application of advanced technology from the perspective of SMEs in developing countries. These enterprises faces unique challenges in their transition to the Fourth Industrial Revolution, given the very significant digital deficit faced by lower-income countries.

  • Chapter 1 of the publication introduces fundamental concepts associated with AI. It addresses a common misconception about AI being synonymous with automation, arguing that AI goes beyond simple tasks by progressively developing an individual decision-making system that emulates human behaviour.
  • Chapter 2 provides an overview on how decreasing costs of hardware and software, raising computational power, new market trends, the development of new market niches, advances in regulation and standardization, national support mechanisms and the impact of COVID19 on the global economy are driving the adoption of AI.
  • Chapter 3 discusses how SMEs’ adoption of AI-based solutions can be constrained by insufficient business infrastructure and standardization processes, limited know-how and financial resources, and skilled workforce shortages.
  • Chapter 4 maintains that as business models change, SMEs from developing countries can have the advantage of creating better data for a value-based economy and using it for evidence-based testing and early access to novel products and services.
  • Chapter 5 proposes a five-staged approach aiming to guide SMEs in their pathway to AI adoption. The first step is to conduct a self-assessment of processes and AI readiness. Second, establish a legal framework, commit resources, and set up the standards for developing an AI strategy. Third, show an adequate data governance standard to manage digital data. Fourth, embrace an AI data-driven decision making, and fifth, create a Proof of Concept and conduct a pilot application.
  • Chapter 6 explores the strengths, weaknesses, opportunities and threats of AI across strategic sectors and examines a selection of case studies supported by UNIDO and other partner organizations, detailing the role of AI, the impact generated for SMEs and general results obtained. It underlines that AI is no longer restricted to large companies and aims to encourage companies to take determined but informed steps for integrating AI in their operations.

The publication was prepared by UNIDO in cooperation with the International Telecommunications Union and the International Trade Centre. Private sector entities, including Siemens A.G., Aizon, and Okra Technologies, also contributed.

Check out the publication here: hub.unido.org/publications

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SMEStreet Edit Desk is a small group of excited and motivated journalists and editors who are committed to building MSME ecosystem through valuable information and knowledge spread.

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