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Uganda lost about UGX 66.6b from fintech daily transactions alone during the internet shutdown that lasted 5 days. Whereas internet connectivity was restored on Monday, reception is poor, and everything is slow.
By Wednesday 13th January 2021 at 9 pm, a day before the general presidential and parliamentary elections, the government had shut down the internet claiming that there were security concerns and foreigners who wanted to interfere with the elections using online tools had to be stopped.
This shutdown affected the economy's major sectors, especially the business sector, where most transactions are done online; this has been looked at as inconsiderate since modern transactions are done through e_commerce.
Financial technology companies (Fintechs) report that they expect to lose close to 66.6b daily due to internet shutdown. Many companies, especially those dealing in financial operations, have made extreme losses, such as banks, telecom companies, businesses, government agencies, organizations, web_based operations (e_tax payments), and insurance companies. Fintech offers an easy system for financial providers a route to get money moving.
According to Fintechs and service providers association chairperson, over 300 million daily Fintech transactions were on halt due to the shutting down of the internet. 2 trillion is transacted monthly through Fintechs. Currently, money ain't moving since we depend on the internet, which has been shut down, and we are at the merge of losing close to UGX 66b.
Internet shutdown has affected several transactions and communications, mostly the fintech sector, mobile money, online trade, internet banking, online shopping, and more.
The Executive director UBA said, "Internet banking and bank to wallet transactions had been slowed down, and payments had been badly hit especially Real-Time Gross Transfers and Electronic File Transfers which are the commonly used money transfers." He added that agent banking with over 13000 agents countrywide had been affected agent, internet banking, and Automated Teller Machine (ATMs) couldn't function. "
The shutting down of the internet has attracted so much attention from experts saying that it will have an extreme cost on the economy. Renowned Economist Mr.Ramathan Ggoobi said that putting Fintechs aside, the airline industry, media, transport, and others had been affected, putting the economy on hold. He added that about $100m could not be moved in banking, managing aircraft both landing and departing were being disrupted.
Uganda revenue authority public and corporate affairs manager said that the shutdown also affected tax payments, including filing tax returns that are about 18000 entities have not filed tax returns. This has forced the tax agency to extend the deadline for filling due returns to Monday. The customs points where international taxes of about shs24 billion are collected daily majorly through digital platforms resorted to using manual means.
The shutdown of the internet has too affected air transport. According to the Emirates country manager, the shutdown affected the airlines' online booking system and used manual means. The same is being done at Entebbe Airport, according to the Manager Civil Aviation Authority.
The tourism industry was massively affected as well, according to Mr.Kayondo, the chairperson of the Association of Uganda Tour operators. He said that they had been rendered useless since they were not able to make bookings and orders.
Swipe2pay App, a financial technology company, used by small businesses to transact cash flows, manage inventory, accept cashless payments and generate comprehensive data on business performance, carries out a minimum of 150 transactions. "We transact up to shs35 million to shs45 million in a week, which is from small businesses. Our businesses are more than 99% online, and for these last days, we were in an operational, financial, and transactional blackout. We work with foreign service providers who we couldn't reach; this is bad for business," said Mr.Kitumba Solomon.
According to the permanent secretary ministry of finance and secretary to the treasury, Patrick Ochailap, there were cross-cutting losses, including defaulting on debt repayments and other international obligations. "This will definitely lead to substantial revenue and business losses in the economy, besides government defaulting on statutory obligations," Patrick said. The treasury Secretary added that banks could not make normal banking transactions, and the Uganda revenue authority couldn't transmit to the consolidated fund through the normal banking system. He said that the shutdown collapsed the government's capacity to process pensions, salaries, and wages while hindering businesses from filing value-added tax returns and remit tax payments.
It is said that the shutdown for 5 days affected 16 million internet users; however, it is still hard for telecom companies to evaluate the loss of all the internet users, mostly data subscribers.