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

Jana Hamdan and Yuanwei Xu

No 2007, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

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.

Keywords: COVID-19; Lockdown; Micro-enterprises; Mobile Money; Coping Strategies; Uganda (search for similar items in EconPapers)
JEL-codes: I18 I31 O12 (search for similar items in EconPapers)
Pages: 34, XX p.
Date: 2022
New Economics Papers: this item is included in nep-ent
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