Nigeria and other Sub-Saharan African countries could unlock an estimated four per cent increase in economic output over the next decade by embracing artificial intelligence (AI), provided governments accelerate investments in electricity, internet connectivity and digital skills, according to a new International Monetary Fund (IMF) report.
The IMF, however, warned that without urgent policy reforms and infrastructure upgrades, the region could realise only about 0.2 per cent additional growth over the same period, effectively missing out on the transformative economic benefits AI is expected to generate globally.
The findings, contained in an IMF paper released on Tuesday, come as governments and multinational technology companies intensify investments in data centres, energy infrastructure and digital networks to position their economies for the AI revolution.
Deputy Division Chief and Mission Chief in the IMF’s African Department and lead author of the report, Martin Schindler, said the extent to which AI contributes to economic growth in Sub-Saharan Africa will depend largely on policy choices made by governments.
According to him, targeted reforms aimed at improving electricity supply, expanding internet access and strengthening digital capabilities would enable countries such as Nigeria to harness AI-driven productivity gains.
“Policy changes will be key to whether further growth can be unlocked from AI,” Schindler said, noting that failure to implement the necessary reforms could limit productivity and economic growth gains to just 0.2 per cent over the next decade.
The IMF noted that although AI is expected to reshape industries and improve productivity worldwide, Sub-Saharan Africa remains the least prepared region to benefit from the technology.
The region ranks lowest on the Fund’s AI Preparedness Index due to persistent deficiencies in digital infrastructure, technical expertise and regulatory capacity.
The report suggests that addressing long-standing infrastructure challenges could significantly improve its competitiveness in the global digital economy.
The Fund stressed that the greatest challenge facing the region is not the fear of job displacement by AI but the ability of countries to adopt, adapt and deploy the technology rapidly enough to remain globally competitive.
A major obstacle identified in the report is inadequate electricity supply. Around half of Sub-Saharan Africa’s population still lacks reliable access to power, making it difficult to sustain digital infrastructure or support AI-enabled businesses.
The IMF recommended increased investments in national electricity grids and mini-grid projects, particularly around schools, hospitals and other public institutions, to create local digital hubs capable of supporting AI development and innovation.
Co-author of the report, Andrew Tiffin, noted that reliable electricity remains the foundation of digital transformation, adding that the rapid expansion of AI presents a new opportunity to accelerate investment in power infrastructure through the development of data centres.
Internet connectivity also remains a major constraint. The report revealed that only 38 per cent of Africans had access to the internet in 2024, compared with the global average of 68 per cent. It called for greater investment in fibre-optic backbone infrastructure and open-access broadband networks to reduce costs and expand digital inclusion across the continent.
Despite these challenges, private sector investment in Africa’s AI ecosystem is beginning to gather pace. Microsoft and G42 recently announced plans to develop a $1bn, 100-megawatt geothermal-powered data centre campus in Kenya, while Cassava Technologies and NVIDIA have entered into a $700m partnership to deploy 12,000 graphics processing units (GPUs) across South Africa, Nigeria, Kenya, Egypt and Morocco.
The IMF also observed that Africa currently hosts only about 160 data centres, representing approximately 5.5 per cent of the global total. Nearly half of these facilities are concentrated in South Africa, Nigeria and Kenya, raising concerns that AI-related investments could become increasingly concentrated in a few countries unless digital infrastructure is expanded across the continent.
The Fund concluded that while AI presents a significant opportunity to accelerate economic growth, improve productivity and enhance competitiveness, Nigeria and other Sub-Saharan African economies must prioritise investments in power, broadband infrastructure, digital education and supportive regulatory frameworks to fully capture the technology’s economic potential. Without such reforms, the region risks falling further behind in the rapidly evolving global AI economy.
