Bridging the Gap or Widening the Divide? The Role of Artificial Intelligence in Firm Productivity, Employment Dynamics, and Inequality in Sub-Saharan Africa

Abstract Book of the 19th International Conference on Modern Research in Management, Economics and Accounting

Year: 2026

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Bridging the Gap or Widening the Divide? The Role of Artificial Intelligence in Firm Productivity, Employment Dynamics, and Inequality in Sub-Saharan Africa

Victoria Thandie Mkhaya

ABSTRACT:

The rapid diffusion of artificial intelligence (AI) across Sub-Saharan Africa presents both an opportunity and a challenge for inclusive and sustainable development. While AI adoption has the potential to enhance firm productivity, foster entrepreneurship, and support technological leapfrogging, it also raises concerns regarding job displacement, widening inequality, and uneven access to innovation. This study examines the dual impact of AI adoption on firm performance and labor market outcomes, with particular emphasis on its implications for inclusive entrepreneurship and sustainable development in the region.
Using a mixed-methods empirical approach, the paper combines firm-level data from the World Bank Enterprise Surveys with national labor force survey data for ten Sub-Saharan African countries over the period 2018–2024. Quasi-experimental techniques, including difference-in-differences and propensity score matching, are employed to compare firms that have adopted AI technologies with comparable non-adopters, allowing for causal inference on productivity and employment effects.
The analysis focuses on three interrelated dimensions. First, it assesses the productivity gains associated with AI adoption and evaluates whether AI acts as a catalyst for firm growth and competitiveness. Second, it examines employment dynamics, distinguishing between job creation in emerging skill-intensive roles and displacement in routine tasks. Third, it evaluates the distributional consequences of AI adoption, investigating its effects on wage inequality, job quality, and access to opportunities for vulnerable groups, including women, youth, and workers in smaller and informal enterprises.
Preliminary findings suggest that while AI adoption is associated with significant productivity improvements in formal and capital-intensive firms, the benefits are unevenly distributed. Evidence points to emerging job polarization and a widening digital divide between technologically advanced firms and smaller enterprises, raising concerns about inclusive growth.
The study contributes to debates on innovation and sustainable development by providing policy-relevant evidence on how AI can be harnessed to support inclusive entrepreneurship in Africa. It concludes with recommendations for building inclusive AI innovation ecosystems, supporting workforce transitions, and aligning technological adoption with sustainable development objectives, particularly SDG 8 (decent work), SDG 9 (innovation), and SDG 10 (reduced inequalities).

Keywords: Artificial intelligence, firm productivity, employment dynamics, inclusive entrepreneurship, Sub-Saharan Africa