Digital Credit in Kenya: A Survey of Costs, Uses and Borrowers Considerations in Relation to Loan Uptake

Abstract

Digital credit involves use of mobile telephone devices and online platforms to secure short term credit. Digital credit has been on a steady rising trend in Kenya since 2012. Availability of credit by households especially the low-income persons have been of great concern for many years. Digital credit has come in handy to address this concern to a great extent. The main aim of this study was to analyse the cost of digital credit, the uses to which the borrowers apply the digital loans and the factors that they consider before applying for the digital loan in Kenya. The data collection methods used are analysis of secondary data and online surveys. The study analysed the data using paired sample t tests and regression analysis methods. The study observed that there is no significant difference between the cost of digital loans and the banks’ lending rate in Kenya. The findings of this study employment status and loan application have a statistically significant effect on the level of loan uptake. Digital credit users age and loan considerations did not have statistically significant effect on the loan uptake.