Uganda: How Internet Shutdown Stalled Businesses

11 February 2021

The Internet shutdown that started on January 13 caused huge losses as businesses, government agencies, organisations and web-based operations such as e-tax payments were disrupted.

The State action was described as inconsiderate due to the modern ways of conducting business through e-commerce.

On the eve of the election, government shut down Internet citing security reasons during the elections for President and Members of Parliament.

The banking and telecom sectors admit their operations were disrupted.

Shutting down the Internet affected payment systems, Real Time Gross transfers and Electronic File Transfers for the large transfers. This is in addition to the 13,000 bank agents who conduct money transfers, Internet banking and the Automatic Teller Machines.

"This complete shutdown froze our business operations. We could not make transactions, people could not access the app, and Zoom meetings were put on hold so I would term the shutdown as an attack on the economy," SafeBoda co-founder and director Ricky Thomson said.

The app is used by riders to pick up passengers, buy airtime, deliver packages and groceries.

"We have a community of 22,000 riders, each earning between Shs30,000 and Shs50,000 per day and that should tell you how much has been lost," Mr Thomson says.

"Most of us in the tech world raise funds globally. For other young innovators to continue growing, they need access to funding. Most people who invest in this sector have a comprehensive understanding of what is happening. This kind of shutdown sets a very bad reputation for the country. The next move should be to prevent it from happening again. Also, someone must be held accountable and there should be some compensation," he said.

At Jumia Uganda, an online shopping store, business operations shut down.

"Cash reconciliation was very difficult because it relies on Internet and the whole supply chain suffered. Some products like food, medicines and groceries are essentials, so consumers were affected," Mr Ron Kawamara, the Jumia-Uganda managing director, says.

As a result of the Internet blackout, the leadership of Fintech industry players in the country estimate that about Shs666 billion was lost on a daily.

Financial technology has grown to become an industry whose platform is being used to improve activities in telecommunication, banking and finance.

Mr Peter Kawumi, the chairperson of Financial Technology and Service Providers Association, says on a daily basis 300 million transactions are carried out by means of Fintech system alone in the country.

"On monthly basis, Shs2 trillion is transacted by means of Fintech system. What the shutdown of the Internet means is that money is not being moved because the Internet system is down," he said.

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