Transforming SME Finance Through Artificial Intelligence: A Predictive Analytics Approach

Small and Medium Enterprises (SMEs) are the main pillar of economic development in emerging economies like South Africa. This study investigates the impact of Artificial Intelligence (AI)-driven predictive analytics on SME financial inclusion and credit scoring. This study uses longitudinal research design and a dataset from 2008-2024. Initially, Partial Least Squares Structural Equation Modelling (PLS-SEM) was employed to explores relationships between digital finance indicators and risk profiles. Machine learning algorithms like XGBoost, Random Forest and Linear Regression were used for predictive evaluation. Results show that AI-based models improve forecasting accuracy and capture financial complexity. The study concludes that AI offers a fairer, data-driven alternative for credit decision-making.