Digital Financial Innovation and the Growth Performance of Small and Medium-Sized Enterprises: Evidence from Kenya (Zenodo)

Summary

• The 2024 FinAccess survey records that formal financial access reached 84.8% and mobile-money usage reached 82.3% among Kenyan adults.p.1
• Daily adult mobile-money usage in Kenya expanded to 52.6% in 2024, up from 23.6% in 2021.p.5
• A matched analysis of 1,001 Kenyan businesses from the 2018 World Bank Enterprise Survey links mobile-money use to innovation, but finds no overall performance advantage.p.5
• A Kenyan randomized trial reveals that increased electronic-payment usage led to improved access to mobile loans.p.6
• Financial exclusion among Kenyan adults declined to 9.9% according to the 2024 FinAccess Household Survey.p.5

Key insights

1. High population-level financial inclusion indicators do not directly measure SME growth, adoption, or business performance.p.2
2. Mobile money adoption promotes product and process innovation in SMEs, yet does not guarantee higher net profitability or business growth.p.2
3. Transaction data and digital payment usage relax information asymmetry, improving small enterprise access to short-term mobile credit.p.7
4. Digital financial tools provide strategic value primarily when paired with managerial skills, customer trust, and robust accounting routines.p.4
5. Short tenor, small loan limits, and high effective fees can make app-based credit poorly matched to long-term enterprise investments.p.3
6. Evaluating digital finance impact requires longitudinal firm-level research to separate technology effects from pre-existing firm characteristics.p.9