^{Photo: Bernard Marr}

Artificial Intelligence (AI) is being hailed as a game-changer for emerging markets, with many experts arguing it could lower the barriers to innovation, entrepreneurship, and global competitiveness. Yet despite the excitement, investors remain cautious — questioning whether the AI revolution will deliver tangible economic results in regions still grappling with infrastructure, regulation, and funding challenges.

Anton Osika, CEO and co-founder of Swedish startup Lovable, recently said AI is set to change “everything” for emerging economies. He believes that by democratizing access to powerful digital tools and automation, AI can empower entrepreneurs in Latin America, Africa, Southeast Asia, and Eastern Europe to compete globally — often without needing massive upfront capital.

AI’s Promise: Lower Barriers, Greater Opportunity

AI is rapidly becoming an equalizer for startups worldwide. From automated customer service systems to AI-driven logistics and predictive analytics, entrepreneurs in emerging markets now have access to tools that can reduce costs and speed up innovation cycles.

For instance, small businesses in countries like India, Brazil, and Kenya are increasingly using AI chatbots and language models to scale operations and reach international customers. In Africa alone, AI-focused startups attracted over $500 million in venture funding in 2024, a significant increase from just $90 million five years earlier.

According to data from the World Bank, emerging markets contribute to more than 60% of global GDP growth, and the integration of AI could boost productivity in these economies by up to 1.5% annually over the next decade. This means millions of potential entrepreneurs could soon gain access to automation technologies that were once exclusive to developed nations.

Investor Skepticism: Cautious Optimism Amid Challenges

Despite the potential, not all investors are convinced that AI will lead to a surge in startup activity across developing regions. Many point to structural hurdles such as weak digital infrastructure, unreliable electricity supply, limited broadband access, and inconsistent regulatory frameworks that continue to slow adoption.

Private equity and venture capital firms remain hesitant. According to a report by PitchBook, less than 8% of global AI-related investment in 2024 went to startups in emerging markets, despite growing interest from governments and international tech firms.

Moreover, some investors worry that the benefits of AI could remain concentrated in wealthier economies that already dominate the global tech landscape — particularly the United States, China, and Western Europe. The lack of skilled AI talent in many emerging nations further compounds the problem, creating a gap between technological potential and real-world execution.

Global Investors Watching for Proof of Impact

Still, analysts suggest that the tide could turn as AI becomes more affordable and widely available. Major technology companies like Google, Microsoft, and OpenAI are increasingly partnering with startups and universities in emerging regions to support local innovation ecosystems.

Recent initiatives, such as Google’s “AI for Africa” program and Microsoft’s Founders Hub expansion into Southeast Asia, aim to provide mentorship, cloud resources, and seed funding for AI-based startups. These efforts could eventually build the investor confidence needed to unlock sustained capital flow into these markets.

Some early examples are already showing promise. In India, AI-driven agriculture platforms are helping farmers optimize crop yields, while in Nigeria, fintech startups are leveraging AI to detect fraud and expand financial inclusion. If such success stories multiply, investor sentiment could shift from skepticism to enthusiasm.

The Road Ahead

The outlook for AI in emerging markets remains a blend of optimism and realism. While technology leaders like Anton Osika are confident that AI will revolutionize business in developing regions, investors want to see clear evidence of scalability and profitability before committing large sums.

Ultimately, the question is not whether AI will reach emerging markets — it already has — but whether these regions can create the ecosystem, talent, and infrastructure to sustain that growth. As the global economy continues to digitize, those who can bridge that gap stand to gain the most from the coming AI-driven transformation.