IDEAS home Printed from https://ideas.repec.org/p/diw/diwwpp/dp2007.html
   My bibliography  Save this paper

COVID-19 Lockdown Compliance, Financial Stress, and Acceleration in Technology Adoption in Rural Uganda

Author

Listed:
  • Jana Hamdan
  • Yuanwei Xu

Abstract

We examine the medium-term impact of COVID-19 for financial well-being and technology adoption in a low-income country. The analysis is based on regionally representative panel data consisting of 1,975 micro-entrepreneurs from rural Uganda. Using a LASSO approach, we first show that several business characteristics predict longer business shutdown due to COVID-19, including running a service business. We also find several respondent characteristics correlate with non-compliance to the lockdown, the strongest predictors being independence of mobility restrictions, financial pressure and extreme remoteness. Second, comparing pre- and post-lockdown levels, we document a sharp increase in the use of financial services. Moreover, we find a substantial drop in business investments and profits. Third, we adopt an instrumental variable approach to analyze the causal impact of the COVID-19 business shutdown. We find that businesses which closed longer are more likely to adopt mobile money services and better business practices.

Suggested Citation

  • Jana Hamdan & Yuanwei Xu, 2022. "COVID-19 Lockdown Compliance, Financial Stress, and Acceleration in Technology Adoption in Rural Uganda," Discussion Papers of DIW Berlin 2007, DIW Berlin, German Institute for Economic Research.
  • Handle: RePEc:diw:diwwpp:dp2007
    as

    Download full text from publisher

    File URL: https://www.diw.de/documents/publikationen/73/diw_01.c.844508.de/dp2007.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Thomas Hale & Noam Angrist & Rafael Goldszmidt & Beatriz Kira & Anna Petherick & Toby Phillips & Samuel Webster & Emily Cameron-Blake & Laura Hallas & Saptarshi Majumdar & Helen Tatlow, 2021. "A global panel database of pandemic policies (Oxford COVID-19 Government Response Tracker)," Nature Human Behaviour, Nature, vol. 5(4), pages 529-538, April.
    2. William Jack & Adam Ray & Tavneet Suri, 2013. "Transaction Networks: Evidence from Mobile Money in Kenya," American Economic Review, American Economic Association, vol. 103(3), pages 356-361, May.
    3. Carlitz, Ruth D. & Makhura, Moraka N., 2021. "Life under lockdown: Illustrating tradeoffs in South Africa’s response to COVID-19," World Development, Elsevier, vol. 137(C).
    4. Anubhab Gupta & Heng Zhu & Miki Khanh Doan & Aleksandr Michuda & Binoy Majumder, 2021. "Economic Impacts of the COVID−19 Lockdown in a Remittance‐Dependent Region," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(2), pages 466-485, March.
    5. Egger, Dennis & Miguel, Edward & Warren, Shana S. & Shenoy, Ashish & Collins, Elliott & Karlan, Dean & Parkerson, Doug & Mobarak, A. Mushfiq & Fink, Günther & Udry, Christopher & Walker, Michael & Hau, 2021. "Falling living standards during the COVID-19 crisis: Quantitative evidence from nine developing countries," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 7(6), pages 1-1.
    6. William Jack & Tavneet Suri, 2014. "Risk Sharing and Transactions Costs: Evidence from Kenya's Mobile Money Revolution," American Economic Review, American Economic Association, vol. 104(1), pages 183-223, January.
    7. Rönkkö, Risto & Rutherford, Stuart & Sen, Kunal, 2022. "The impact of the COVID-19 pandemic on the poor: Insights from the Hrishipara diaries," World Development, Elsevier, vol. 149(C).
    8. Battistini, Niccolò & Stoevsky, Grigor, 2021. "The impact of containment measures across sectors and countries during the COVID-19 pandemic," Economic Bulletin Boxes, European Central Bank, vol. 2.
    9. Haiqiang Chen & Wenlan Qian & Qiang Wen, 2021. "The Impact of the COVID-19 Pandemic on Consumption: Learning from High-Frequency Transaction Data," AEA Papers and Proceedings, American Economic Association, vol. 111, pages 307-311, May.
    10. Blumenstock, Joshua E. & Eagle, Nathan & Fafchamps, Marcel, 2016. "Airtime transfers and mobile communications: Evidence in the aftermath of natural disasters," Journal of Development Economics, Elsevier, vol. 120(C), pages 157-181.
    11. Anna Josephson & Talip Kilic & Jeffrey D. Michler, 2021. "Socioeconomic impacts of COVID-19 in low-income countries," Nature Human Behaviour, Nature, vol. 5(5), pages 557-565, May.
    12. Ozili, Peterson & Arun, Thankom, 2020. "Spillover of COVID-19: Impact on the Global Economy," MPRA Paper 99317, University Library of Munich, Germany.
    13. Riley, Emma, 2018. "Mobile money and risk sharing against village shocks," Journal of Development Economics, Elsevier, vol. 135(C), pages 43-58.
    14. Ali, Tariq Omar & Hassan, Mirza & Hossain, Naomi, 2021. "The moral and political economy of the pandemic in Bangladesh: Weak states and strong societies during Covid-19," World Development, Elsevier, vol. 137(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Catia Batista & Pedro C. Vicente, 2018. "Is mobile money changing rural Africa? Evidence from a field experiment," NOVAFRICA Working Paper Series wp1805, Universidade Nova de Lisboa, Nova School of Business and Economics, NOVAFRICA.
    2. Hausmann, Ricardo & Schetter, Ulrich, 2022. "Horrible trade-offs in a pandemic: Poverty, fiscal space, policy, and welfare," World Development, Elsevier, vol. 153(C).
    3. Hammond, James & Siegal, Kim & Milner, Daniel & Elimu, Emmanuel & Vail, Taylor & Cathala, Paul & Gatera, Arsene & Karim, Azfar & Lee, Ja-Eun & Douxchamps, Sabine & Tu, Mai Thanh & Ouma, Emily & Lukuyu, 2022. "Perceived effects of COVID-19 restrictions on smallholder farmers: Evidence from seven lower- and middle-income countries," Agricultural Systems, Elsevier, vol. 198(C).
    4. Olive Umuhire Nsababera & Vibhuti Mendiratta & Hannah Sam, 2023. "The Impact of COVID-19 on Household Welfare in the Comoros: The Experience of a Small Island Developing State," Global Perspectives on Wealth and Distribution, in: Shirley Johnson-Lans (ed.), The Coronavirus Pandemic and Inequality, chapter 0, pages 141-195, Palgrave Macmillan.
    5. Patrick-Hervé Mbouombouo Mfossa, 2019. "Mobile Money-Driven Financial Inclusion and Financial Resilience in Sub-Saharan Africa: Insights from Cameroon [L’inclusion financière via le mobile money et résilience financière en Afrique Subsah," Post-Print hal-03622403, HAL.
    6. Gregory Mvogo & Christèle Gladisse Awounang Djouaka, 2022. "Effet du mobile money sur la résilience des ménages exerçant des activités génératrices de revenus au Cameroun," African Development Review, African Development Bank, vol. 34(4), pages 459-471, December.
    7. Kabengele, Christian & Hahn, Rüdiger, 2021. "Institutional and firm-level factors for mobile money adoption in emerging markets–A configurational analysis," Technological Forecasting and Social Change, Elsevier, vol. 171(C).
    8. Hangoma, Peter & Hachhethu, Kusum & Passeri, Silvia & Norheim, Ole Frithjof & Rivers, Johnathan & Mæstad, Ottar, 2024. "Short- and long-term food insecurity and policy responses in pandemics: Panel data evidence from COVID-19 in low- and middle-income countries," World Development, Elsevier, vol. 175(C).
    9. Tabakis,Chrysostomos & Ten,Gi Khan & Merfeld,Joshua David & Newhouse,David Locke & Pape,Utz Johann & Weber,Michael, 2022. "The Welfare Implications of COVID-19 for Fragile and Conflict-Affected Areas," Policy Research Working Paper Series 10081, The World Bank.
    10. Markus K. Brunnermeier & Nicola Limodio & Lorenzo Spadavecchia, 2023. "Mobile Money, Interoperability and Financial Inclusion," Working Papers 696, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    11. Luc Jacolin & Massil Keneck & Alphonse Noah, 2019. "Informal Sector and Mobile Financial Services in Developing Countries: Does Financial Innovation Matter?," Working papers 721, Banque de France.
    12. Askar Ismailov & Albert Benson Kimaro & Hisahiro Naito, 2019. "The Effect of Mobile Money Usage on Borrowing, Saving, and Receiving Remittances: Evidence from Tanzania," Tsukuba Economics Working Papers 2019-002, Faculty of Humanities and Social Sciences, University of Tsukuba.
    13. Batista, Catia & Vicente, Pedro C., 2020. "Improving access to savings through mobile money: Experimental evidence from African smallholder farmers," World Development, Elsevier, vol. 129(C).
    14. Luc Jacolin & Joseph Keneck Massil & Alphonse Noah, 2021. "Informal sector and mobile financial services in emerging and developing countries: Does financial innovation matter?," The World Economy, Wiley Blackwell, vol. 44(9), pages 2703-2737, September.
    15. Naito, Hisahiro & Yamamoto, Shinnosuke, 2022. "Is better access to mobile networks associated with increased mobile money adoption? Evidence from the micro-data of six developing countries," Telecommunications Policy, Elsevier, vol. 46(6).
    16. Godsway Korku Tetteh, 2023. "Local digital lending development and the incidence of deprivation in Kenya," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 9(1), pages 1-26, December.
    17. Hisahiro Naito & Shinnosuke Yamamoto, 2022. "Is Better Access to Mobile Networks Associated with Increased Mobile Money Adoption? Evidence from the Micro-data of Six Developing Countries," Tsukuba Economics Working Papers 2022-001, Faculty of Humanities and Social Sciences, University of Tsukuba.
    18. Kass-Hanna, Josephine & Lyons, Angela C. & Liu, Fan, 2022. "Building financial resilience through financial and digital literacy in South Asia and Sub-Saharan Africa," Emerging Markets Review, Elsevier, vol. 51(PA).
    19. Olukorede Abiona & Martin Foureaux Koppensteiner, 2022. "Financial Inclusion, Shocks, and Poverty: Evidence from the Expansion of Mobile Money in Tanzania," Journal of Human Resources, University of Wisconsin Press, vol. 57(2), pages 435-464.
    20. Barker, Nathan & Davis, C. Austin & López-Peña, Paula & Mitchell, Harrison & Mobarak, Ahmed Mushfiq & Naguib, Karim & Reimão, Maira Emy & Shenoy, Ashish & Vernot, Corey, 2023. "Migration and resilience during a global crisis," European Economic Review, Elsevier, vol. 158(C).

    More about this item

    Keywords

    COVID-19; Lockdown; Micro-enterprises; Mobile Money; Coping Strategies; Uganda;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:diw:diwwpp:dp2007. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Bibliothek (email available below). General contact details of provider: https://edirc.repec.org/data/diwbede.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.