Canada’s small and medium-sized businesses could help grow the economy by six per cent, or about $150 billion, if all of them used AI in their operations, according to a new study by the Business Development Bank of Canada (BDC).

The report, published Wednesday, found that businesses using AI generated 24 per cent higher sales per employee on average than those that did not, after accounting for factors such as industry and location. The bank also estimated that Canada could see a 14 per cent GDP boost—representing about $350 billion—if all small and medium-sized businesses used digital technology more broadly at the same level as their most advanced peers.

The findings land as the federal government prepares to unveil its AI strategy this week, in which adoption among businesses is expected to be a focus. Ottawa wants half of the country’s firms to be using the technology by 2030, CBC first reported, supported by subsidies for computing power, tools to help firms identify use cases and new AI training programs. 

Governments and industry are increasingly looking to AI as a tool to improve Canada’s weak productivity growth. The country ranks near the bottom of the G7 for productivity per hour worked, ahead of only Japan, according to OECD data. 

For its report, BDC surveyed 1,500 small and medium-sized enterprises (SMEs)—those with fewer than 500 employees—in February to gauge their “digital maturity.” The bank scored companies out of 100 based on factors including whether and how much a company used AI, its data management practices and whether it had a formal digital strategy and employee training in place. 

Overall, the report shows many companies remain in the early stages of using AI. It found that 44 per cent of businesses had low or very low digital maturity, compared to 23 per cent who scored high or very high. Just 30 per cent of businesses were using generative AI tools such as chatbots and content-generation software, up from nearly zero before the public launch of ChatGPT in late 2022. Respondents reported mostly using AI for administrative support, HR management and sales and marketing.  

The biggest barriers to widespread AI use were high cost, inadequate skills and cybersecurity risks. According to the report, 45 per cent of SMEs experienced cyber attacks or attempted attacks in the past 12 months, up from 17 per cent in 2021. 

BDC chief information officer Jean‑Sébastien Charest said many small businesses avoid AI because they incorrectly assume it’s too expensive or complex for them to use. “The companies pulling ahead are the ones moving past those assumptions,” he said, “starting small, integrating AI into their operations, and using it to make faster, better decisions every day.” 

The report notes that more and better AI adoption across small and medium businesses could have an outsized impact on Canada’s productivity because of how large an economic role those businesses play. SMEs employ 9.6 million people, or about 54 per cent of workers, according to the latest federal data, and account for about half of Canada’s GDP. 

Companies that were using AI reported benefits. Seventy-eight per cent said they were satisfied with the return on their investment, while three-quarters said they planned to increase AI spending over the next year. 

Businesses with formal processes around AI use were more satisfied. Those with concrete AI plans reported an 85 per cent satisfaction rate with their investments in the technology, compared to 66 per cent among companies using AI without a plan. Businesses that trained employees on AI reported 86 per cent satisfaction rate versus 53 per cent among those with no training. The report also found that the quantity and quality of a company’s digital data “greatly influences its ability to take full advantage of AI.”