Digital finance and financial sustainability among youth-owned Craft micro enterprises in migori county, Kenya

Abstract

This study examined the effect of digital finance on the financial sustainability of youth-owned craft micro enterprises in Migori County, Kenya. The study was motivated by persistent financial vulnerability and sustainability challenges facing youth enterprises despite the increasing penetration of digital financial services across Kenya. The study specifically sought to determine the effect of digital credit access, digital payment efficiency, digital insurance uptake, and digital savings solutions on the financial sustainability of youth-owned craft micro enterprises in Migori County. The study was anchored on the Technology Acceptance Model, Diffusion of Innovation Theory, Resource-Based View, and Financial Intermediation Theory. A descriptive research design was adopted, targeting 7,182 youth-owned craft enterprises drawn from the eight sub-counties of Migori County. A sample was selected using stratified random sampling, and data were collected using structured questionnaires and interview schedules. The data were analyzed using descriptive and inferential statistics with the aid of the Statistical Package for Social Sciences (SPSS) version 25. The correlation analysis revealed positive and statistically significant relationships between all the independent variables and financial sustainability. Regression results indicated that digital credit access had a positive and significant effect (β = 0.218, p = 0.001), showing that access to affordable and timely digital loans enhances liquidity and operational stability among youth enterprises. Digital payment efficiency had a positive and significant effect (β = 0.164, p = 0.008), implying that efficient payment systems improve transaction speed, transparency, and financial management. Digital insurance uptake also had a significant positive effect (β = 0.195, p = 0.001), suggesting that mobile-based insurance products strengthen enterprise resilience against financial shocks. Digital savings solutions had the strongest positive effect (β = 0.442, p < 0.001), underscoring the importance of saving culture in liquidity management and reinvestment capacity. The study concluded that digital finance significantly enhances the financial sustainability of youth-owned craft micro enterprises. It recommended that policymakers promote inclusive digital credit policies, expand mobile insurance coverage, and encourage digital savings adoption through tailored financial literacy programs. The study suggested that future research examine digital finance in other sectors and regions, and integrate additional factors such as innovation capability, regulatory environment, and management practices to enrich understanding of enterprise sustainability in the digital economy.