Digital Credit and Financial Performance of Small and Medium Enterprises in Nairobi City County, Kenya

This study ascertained the effect of digital credit on financial performance of selected SMEs in the CBD of Nairobi City County, Kenya. The research employed a cross-sectional research design. The population comprised 5,400 SMEs located in the Nairobi CBD. The study utilized a stratified random sampling technique to determine the necessary sample size. The sample involved responders selected by stratified proportionate sampling to identify 358 significant SMEs across several categories by the Licensing Office in Nairobi City County Offices. The research utilized source data gathered via a research tool. A pre-testing questionnaire was administered to 18 owners/managers of SMEs not included in the study sample. All the others in SMEs in Nairobi, not included in the study population, made up this population. Cronbach’s alpha tested the reliability of the scale and a score of 0.7 was considered. SPSS Package for Social Sciences was used. All the data gathered was of the quantitative type and it was analyzed through inferential analysis and descriptive analysis. It was shown as figures and tables. It was found that digital credit, its easy access, the rules surrounding it and its terms are key to how SMEs in Nairobi City County, Kenya, manage their finances. The research showed that SMEs in Kenya benefit financially from being able to access digital credit. Digital credit does not have a major impact on SME finances. It is concluded that the rules for digital credit play, a vital role in the financial health of SMEs. SMEs depend on privacy regulation, identity theft regulation and interest rate regulation that deal with the issues and appropriate responses. From this study, it is advised that SMEs take advantage of digital credit to help them reach their main aims and carefully plan how to achieve their objectives. Those who provide digital credit should make products available to SMEs to assist in shaping their offerings, sell them and urge use of the products by other players in the market. It is necessary to make sure the quality of the credit service is perfect, as this can keep customers from comparing prices with others. The report advises that digital credit providers for SMEs in Nairobi should come up with strategies to increase their online visibility. Keywords: Digital credit usage, credit accessibility, credit terms, digital credit regulations