Nairobi, July 12 -- In October, it will be exactly 10 years since Abubakar Godhana Ali accessed his first-ever credit from the formal financial sector. Much has changed in his life since then, but he has never forgotten the Sh250 loan he received from a digital lender.

"It was a lifeline," he recalls. "It looks small, but in university that was enough to get by for one week, even two if used well."

As a student, the only loans he could access were from friends and family. In many occasions, however, they had nothing to lend. At times, that meant going to bed hungry.

When a friend told him about a smartphone app that could instantly lend him Sh250 without any form of security, he was astounded. It was something unheard of at the time. H...