In South Africa’s fast-evolving business landscape, access to funding remains one of the most persistent barriers to growth for small, medium and micro enterprises (SMEs).
By Andrew Maren, founder and CEO of ProfitShare Partners
These businesses are often hailed as the backbone of the economy. And yet, without access to capital, they face structural disadvantages that stifle their potential.
According to recent estimates, just 15% of the country’s approximately 3-million SMEs have access to formal credit.
Artificial intelligence (AI) has emerged as a powerful equaliser in this regard. Once limited to corporates with large budgets, AI-driven tools are now enabling SMEs to overcome longstanding barriers to finance. As digital adoption accelerates, businesses that fail to embrace AI risk falling behind due to lacking the tools to execute at speed and scale.
Enabler for growth
AI is projected to add $15,7-trillion to the world economy by 2030, with a growing share of that potential linked to productivity gains among smaller businesses. At its core, AI can help SMEs build business cases that are funding-ready.
By leveraging real-time financial data, transactional histories, and predictive analytics, AI applications can assess the creditworthiness of a small business far more efficiently than traditional, manual processes. For fintechs and funding providers, this offers a game-changing opportunity where they can move beyond slow paperwork and static assessments toward agile decision-making that serves more businesses, faster.
For many small businesses, the waiting period between applying for funding and receiving it can be the difference between growth and closure. AI allows funders to automate risk assessment, identify red flags early, and customise financing structures to suit the business’s profile.
Instead of relying solely on legacy scoring systems, AI-based models can adapt to sector nuances, seasonal fluctuations, and even alternative data sources to build a fuller picture of a business’s financial health.
This agility allows funders to support more businesses without compromising on risk oversight. It is an especially important advantage in uncertain economic conditions.
Injecting efficiencies
But AI’s value extends beyond funding decisions. It can also help small businesses manage operations more efficiently. AI-powered tools like chatbots, for instance, can streamline customer communication via platforms like WhatsApp, enabling businesses to offer round-the-clock service without overextending internal resources. This kind of automation is not about replacing people — it’s about freeing them up to focus on strategic work, like growth planning and customer engagement.
Of course, AI adoption among SMEs comes with challenges. Many business owners still believe that AI is out of reach. They think it is either too expensive, too complex, or too dependent on technical expertise. These misconceptions persist, especially in markets like South Africa where digital transformation has been uneven. This is reflected in the fact that fewer than 30% of South African SMEs have adopted digital operational tools.
But the reality is that many cloud-based AI tools today are accessible, scalable and built with small businesses in mind.
The key lies in starting with the right foundation. A cloud-based enterprise resource planning (ERP) system, for example, provides a central source of real-time data across functions — sales, finance, inventory, and HR. Once in place, this digital backbone makes it easier to plug in AI tools that support the business’s most critical goals, from cash flow forecasting to supplier management.
Becoming pro-active
In our experience, the businesses that benefit most from AI are those that adopt a mindset of continuous evolution. They do not wait for the perfect moment or a full tech overhaul. Instead, they begin with the data they have, implement manageable tools, and build capacity along the way. They see AI not as a silver bullet, but as a strategic enabler.
As South Africa continues its economic recovery, ensuring that SMEs are digitally empowered has become a necessity. AI has the power to unlock funding at scale, bring underserved businesses into the formal economy, and help close the financing gap that holds so many back.