SU+ Digital Repository

SU+ is an online repository for the preservation and promotion of assorted digital content at Strathmore University

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    The Determinants of probability of default for digital credit by youth in Nairobi, Kenya: moderating effect of loan size
    (Strathmore University, 2026) Mururu, Brenda Mwendwa
    Digital credit has been widely recognized as a form of financial inclusion in modern financial markets, with its origins in Kenya dating back over a decade through M-Shwari. This has since evolved into a market with several independent Digital Credit Providers and banks offering digital credit which are regulated by the Central Bank of Kenya. Despite its benefits, digital credit had presented challenges, particularly around consumer data protection by digital lenders and the effect of these facilities on the borrowers’ financial capability, often inducing debt distress. This is evidenced by the high rates of default that had been observed for these facilities in Kenya and other global markets. Consequently, the main objective of this study was to investigate the determinants of the probability of default for digital credit facilities by youth in Nairobi County. The specific objectives of the study were to determine the effects of borrower characteristics, loan characteristics, and lender characteristics on the probability of default for digital credit facilities by youth in Nairobi County. The borrower characteristics analysed included age, gender, default history, student loan status, marital status, level of income, occupation, and level of education. The loan characteristics investigated were the loan interest rate, loan tenure, and loan purpose. The lender characteristics explored were the lender’s business model, the applied mode of payment, and the loan appraisal period. The study was based on the adverse selection theory and the financial intermediation theory. The population of interest for this study was the Nairobi County youth and the sample size was determined using Cochran’s formula and through stratified random sampling. Primary data collection was done using structured questionnaires. A probit regression model was used to analyse the data. The study concluded that borrower characteristics, loan features, and lender practices have a positive and statistically significant influence on the probability of default on digital credit facilities among youth in Nairobi County. The study recommends that digital credit providers refine their assessment models, invest in financial literacy programs, and adopt flexible loan terms, while urging policymakers to implement regulations that enhance transparency, promote financial education, and reduce information asymmetry to improve youth access to credit and reduce default rates. Key words: Digital credit, probability of default, youth, borrower characteristics, loan characteristics, lender characteristics, Digital Credit Providers, loan size
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    Effect of financial access, financial literacy and risk management on the extent of participation in dairy farming in Kiambu County, Kenya
    (Strathmore University, 2026) Kimani, Evangeline Mukami
    Participation in dairy farming plays a vital role in improving household income, enhancing food security and promoting rural economic development in Kenya. However, farmers’ participation remains uneven despite the expansion of financial institutions and agricultural support services. This study examined the effects of access to financial products, financial literacy and risk management services on participation in dairy farming in Kiambu County, Kenya. Guided by the Financial Intermediation Theory and Social Capital Theory and anchored in a positivist research philosophy, the study employed a structured questionnaire to collect primary data from 397 respondents. Data analysis involved both descriptive and inferential statistical techniques. Statistical analyses were conducted using the Statistical Package for Social Sciences (SPSS) Version 28.0. The findings revealed that financial accessibility, financial literacy and risk management services had positive and statistically significant effects on dairy farming participation. Financial accessibility was the strongest predictor (Model 1: β = 0.436, p < 0.05; Model 2: β = 0.421, p < 0.05), followed by financial literacy (β = 0.320; β = 0.307) and risk management services (β = 0.295; β = 0.281). The regression model explained 47.7% of the variation in dairy farming participation (R² = 0.477), increasing to 53.9% (R² = 0.539) after controlling for herd size, household size, income level and education level. The study concludes that improved access to financial products, enhanced financial literacy and effective risk management mechanisms significantly increase participation in dairy farming. The study recommends the development of farmer-friendly credit products, integration of financial literacy into extension services and promotion of affordable livestock insurance schemes. Policymakers should strengthen agricultural financial inclusion frameworks, implement credit guarantee schemes and support risk management products to enhance resilience in the dairy sector. The study was limited to Kiambu County and relied on self-reported questionnaire data, which may limit the generalization of findings to other regions. Future studies should examine additional determinants of participation like market access, technological adoption, land tenure systems and regulatory frameworks across different counties to provide a more comprehensive understanding of dairy sector participation. Keywords: Financial accessibility, financial literacy, risk management services, dairy farming participation, agricultural finance, Kiambu County.
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    Drivers of credit access among women owned manufacturing Small and Medium Enterprises in Kenya
    (Strathmore University, 2026) Odanga, Snider Mugese
    Access to formal credit remains a persistent constraint for women-owned small and medium-sized enterprises (SMEs), particularly within capital-intensive sectors such as manufacturing. Despite progress in financial inclusion in Kenya, significant gender disparities continue to characterize enterprise-level financing. This study examined the drivers of credit access among women-owned manufacturing SMEs in Kenya, with specific focus on credit perception and collateral availability, and further assessed the moderating role of firm size using a sample of 161firms. Anchored in the Theory of Planned Behavior and Information Asymmetry Theory, the study conceptualized credit access as jointly shaped by behavioral (demand-side) and structural (supply-side) factors. Using secondary firm-level data from the World Bank Enterprise Survey and applying binary logistic regression, the study analyzed how credit perception, collateral availability, and firm size influence the likelihood of accessing formal credit. The findings indicate that unfavorable credit perceptions significantly reduce the probability of accessing credit, confirming the presence of discouraged borrowing behavior among women entrepreneurs. Collateral availability emerged as the most dominant structural determinant, reflecting the continued reliance on asset-based lending practices in Kenya’s financial system. Importantly, firm size was found to moderate both relationships: as firm size increases, the negative effect of credit perception weakens, while the marginal importance of collateral diminishes. These results demonstrate that credit exclusion among women-owned manufacturing SMEs is not solely a function of credit supply constraints but is also shaped by perception-driven self exclusion and firm heterogeneity. The study contributes to the literature by integrating behavioral and structural perspectives within a gendered and sector-specific context. Policy implications include the need for perception-sensitive lending frameworks, alternative collateral mechanisms, and size-segmented SME finance strategies. By highlighting the interaction between behavioral constraints and structural barriers, the study provides evidence-based insights to inform more inclusive financial policies aimed at strengthening women’s participation in Kenya’s manufacturing sector. Key Words: Women owed manufacturing SMEs, credit perception, collateral availability, firm size and credit access.
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    Effect of the African continental free trade area on food production in the East African Community
    (Strathmore University, 2026) Wandei, Irene
    Food production remains a pressing challenge in the East African Community (EAC), where recurring climate shocks, production volatility, and cross-border trade inefficiencies continue to constrain food system stability. The African Continental Free Trade Area (AfCFTA) presents a major policy opportunity to address these constraints by promoting tariff liberalization, reducing non-tariff barriers, improving market access, and deepening intra-African trade integration. This study examined the effect of AfCFTA-related trade reforms on food production in the EAC, focusing on four key dimensions: tariff reduction, non-tariff barrier reform, export market access, and intra-African trade intensity. Anchored on New Trade Theory and supported by food production theory, the study adopted a positivist research philosophy and a longitudinal correlational research design. Secondary panel data covering a census of the seven EAC countries from 2016 to 2025 was analyzed to assess how these AfCFTA variables influence food production, measured using the Food Production Index. Data analysis involved descriptive statistics, correlation analysis, and panel regression modelling to quantify the relationship between AfCFTA-driven trade reforms and food production outcomes. Using panel data from seven EAC countries over the period 2016–2025, the study applied a random effects regression model. The results indicated that the model was statistically significant, with approximately 35.35% of variations in food production explained by the selected variables. The findings revealed that tariff reduction, non-tariff barrier reduction, and market access had statistically significant effects on food production, while intra-African trade intensity had no statistically significant effect. The study concludes that AfCFTA trade reforms play a significant role in influencing food production in the EAC, particularly through improved trade facilitation and expanded market access. However, the impact of regional trade intensity remains limited, suggesting that trade integration alone is insufficient to drive food production without addressing underlying structural constraints. The study recommends strengthening the implementation of AfCFTA provisions related to tariff reduction, non-tariff barrier efficiency, and market access, while emphasizing the need for improved coordination, infrastructure development, and institutional capacity to enhance the effectiveness of regional trade integration on food production. Keywords: Tariff Reduction, Non-Tariff Barriers, Market Access, Inter-African Trade Intensity, Food Production, AfCFTA.
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    The Effect of industrial dynamics on Carbon dioxide emissions in Africa’s manufacturing sector and the moderating role of industrial emissions policies
    (Strathmore University, 2026) Gathuru, Edmund Kanyugi
    Africa's manufacturing sector is a critical driver of economic growth but also a significant contributor to Carbon dioxide (CO2) emissions due to its reliance on energy-intensive processes and outdated technologies. Despite global efforts to promote efficiency and reduce emissions, limited research exists on the effect of industrial dynamics on CO2 emissions in Africa's manufacturing sector. This study addressed this by investigating the effect of manufacturing sector’s share of GDP, energy consumption efficiency and scientific innovations on CO2 emissions, with a specific focus on the moderating role of industrial emissions policies. The study adopted the Environmental Kuznets Curve (EKC) hypothesis and the Resource Curse theory as its theoretical frameworks. The study targeted manufacturing sectors in forty-seven (47) African countries. Data was sourced from the World Bank, United Nations Industrial Development Organization (UNIDO), and Climate Watch. A panel data regression model was used to analyze the relationship between the variables, with industrial emissions policies measured through industrial emissions intensity. Descriptive statistics revealed wide disparities in emissions and energy use, with concentrations in a few industrial hubs. Correlation analysis showed strong positive links between emissions, manufacturing output and emission intensity, while innovation was associated with higher emissions in the short run. Results from the Random Effects GLS model indicated that energy intensity and manufacturing share of GDP significantly reduce emissions, whereas innovation increases them, highlighting the need to align R&D with low-carbon objectives. Incorporating industrial emission intensity improved model fit, confirming its positive effect on emissions and emphasizing the importance of emission standards, energy efficiency programs and regional collaboration to decouple industrial growth from environmental degradation. Key Words: Industrial Dynamics, Industrial Emissions Policies, Carbon Dioxide Emissions, Manufacturing Sector, Manufacturing sector’s share of GDP, Energy consumption efficiency, Scientific innovations.