Nigerian companies are stepping up investments in data privacy as they scale artificial intelligence (AI) adoption, with 40 per cent of organisations now dedicating more than 30 per cent of their IT budgets to privacy safeguards, according to a new industry report.
The study, The AI Privacy Equation: The Nigerian Model of Responsible AI Adoption, conducted by Arion Research on behalf of Zoho, was unveiled at the Zoholics Nigeria conference. It found that 94 per cent of Nigerian organisations have appointed a dedicated privacy officer or team, a figure that surpasses global averages.
“Nigerian businesses are not just adopting AI, they are embedding it responsibly,” the report stated. “In fact, 40 per cent of the organisations allocate more than 30 per cent of their IT budgets specifically to privacy protection, reflecting the belief that strong governance is a competitive advantage rather than a constraint.”
The financial services sector is leading AI adoption, making up 29 per cent of survey respondents. Top use cases include customer service automation (49 per cent), software development and enhancement (46 per cent), and marketing optimisation (32 per cent), all implemented with strict privacy standards.
Despite the progress, skills shortages remain a critical challenge. About 37 per cent of respondents cited lack of technical expertise as the main barrier to AI adoption, while 35 per cent pointed to privacy and security concerns. To bridge the gap, 69 per cent of firms are prioritising data analysis and interpretation skills, 53 per cent are focusing on AI literacy, and 40 per cent are training staff in prompt engineering for generative AI tools.
The report also highlighted stronger compliance following Nigeria’s Data Protection Act, with nearly 65 per cent of organisations increasing regulatory consciousness. Companies are adopting regular AI privacy audits (57 per cent), data minimisation practices (57 per cent), and explainability requirements for AI decisions (52 per cent).
Michael Fauscette, CEO and chief analyst of Arion Research, said the findings challenge assumptions that AI growth undermines privacy.
“The Nigerian model challenges the conventional wisdom that AI adoption requires privacy trade-offs,” Fauscette said. “When 84 per cent of organisations strengthen their privacy measures through AI implementation rather than weakening them, it demonstrates that privacy-conscious design can enhance AI outcomes. Nigerian businesses are proving that robust governance isn’t a constraint on innovation—it’s a competitive advantage that builds customer trust and creates sustainable AI implementations.”
Zoho Nigeria’s country head, Kehinde Ogundare, added that the company is seeing strong growth in local demand.
“We continue to invest in Nigeria as businesses here accelerate their adoption of technology to grow and scale,” Ogundare said, noting that Zoho recorded 75 per cent customer growth in 2024.
Of the 386 Nigerian respondents surveyed, 93 per cent have already embarked on AI integration, with 31 per cent reporting advanced organisation-wide use and 26.5 per cent rolling out AI across multiple departments.
