The Role of Trust in Digital Credit Adoption by Kenyan Smallholders

Despite Kenya's widespread digital financial services infrastructure, gaps remain in digital credits (DC) adoption among smallholders. Hence, this study aims to understand smallholders’ adoption of DC. For this purpose, we surveyed 676 Kenyan smallholders in 2023 to explore how their beliefs about DC influence their decision-making by using the Unified Theory of Acceptance and Use of Technology (UTAUT) framework. Our findings show that smallholders are most likely to use DC when they believe it will improve their financial situation. How easy the technology is to use or social influence did not statistically significantly correlate with adoption intentions. Trust in the service providers played a crucial role, moderating how farmers view the benefits of DC. Our findings reveal that low-trust farmers scrutinize performance benefits more intensely, while higher-trust farmers are more receptive to streamlined interfaces. This suggests that DC providers need segment-specific strategies: for low-trust segments, providers should prioritize transparent demonstration of concrete benefits, while for higher-trust segments, enhancing service reliability and data protection is more effective. These targeted approaches would address specific barriers to DC adoption among smallholders, potentially improving their financial resilience and agricultural productivity in Kenya and similar contexts. JEL: Q10, Q12, Q14