Utilizing artificial intelligence (AI) and Information Technology tools in business and business development is an essential step for small and medium enterprises (SMEs) in thriving towards development and sustainability. This study attempts to explore the role of utilizing AI and IT tools in mediating the effect of organizational learning (OL) and entrepreneurial competences (ECs) on SMEs performance (SMEsP) in a lower income economy. The study adopts quantitative methods relying on primary data collected conveniently from 192 managers of SMEs in Yemen. Partial Least Square Structural Equation Modelling (PLS-SEM) is used to investigate the research model. The findings indicated that organizational learning has a significant effect on utilizing AI and IT tools (β = 0.504, p < 0.001) and SMEs performance (β = 0.183, p < 0.001), while entrepreneurial competences has a significant effect only on SMEs performance (B = 0.379, p < 0.001), further, there is a significant mediating role of utilizing AI and IT tools in the relationship between OL and SMEs performance. The study concludes that utilizing AI and IT tools can be enhanced by learning and awareness in order to be contributory towards promoting business performance among SMEs in lower income economies.