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

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  • 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
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    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

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