How Uganda reaps from digital gains

Without doubt, in Sub-Saharan Africa, the Covid-19 pandemic accelerated digitalisation uptake for many countries. As lockdowns intensified, multitudes turned to internet-enabled digital platforms to interact, transact, access credit and access social services.

Bank of Uganda statistics show that the value of mobile money transactions grew by 28.2 percent  ($2 billion) in 2020 compared to 2.9 percent in 2019. This happened especially during lockdowns. Similarly, many businesses quickly adopted digital solutions to overcome disruptions.

A case in point is Jumia, an e-commerce company, which boosted sales and customer reach for more than 3,000 informal food businesses during the Covid-19 lockdown in Kampala.

Specifically, the e-commerce platform on-boarded food vendors in seven markets; Nakasero, Nakawa, Wandegeya, Bugolobi, Kalerwe, Nalya and Kibuye to sell their agricultural products.

Relatedly, government also leveraged online platforms to provide basic services to the population during the pandemic, including use of mobile money to advance cash transfers (Shs100,000) to the vulnerable households.  Also, e-governance services such as e-courts were adopted to administer justice while e-learning platforms were widely used in the education sector.

Despite these developments, the pandemic exposed pre-existing digital divide across the various sectors and segments of the population.

 The 2019/20 Uganda National Household survey (UNHS) shows that out of the 56 percent of the households that access internet, only 6 percent of these actually use it.

Further, the survey finds that limited internet usage is mainly attributed to limited digital skills and high costs. According to Uganda Communications Commission, Uganda has the highest costs of internet in East Africa.

A recent study by the telecom regulator put the cost of acquiring one gigabyte of internet at $2.67 (Shs 9,674) compared to Kenya, Tanzania and Rwanda at $2.41 (Shs8,732), $2.18 (Shs 7,899) and $2.18 (Shs7,899) respectively.

Beyond internet connectivity, deficiencies in the basic support infrastructure for digitalisation of economy such as electricity also exclude many from the digital economy.

For instance, the UNHS further shows that a substantial share of households (44 per cent) have no access to electricity which affects internet and mobile phone penetration.

 Regarding e-governance, Uganda is yet to develop an integrated digital identification system that facilitates the access and provision of government and financial services.

Particularly, lack of digital identification poses a big challenge in targeting of the vulnerable beneficiaries in social transfer programmes such as the recent cash transfers implemented by government during the lockdown.

Whereas digitalisation is critical for the economy’s recovery from the pandemic, it poses the risk of perpetuating cybercrime. The 2020 Serianu report on cyber security shows that cybercrime grew by 30 per cent in 2020.

Increased prevalence of digital fraud weakens user trust and could easily erode the recent gains in digitalization.  Therefore, for Uganda to consolidate her digital gains, deliberate efforts are imperative to address these challenges.

The use of digital platforms in the post Covid- 19 pandemic will vary across sectors in light of the pre-existing level of digitisation. Sectors which were more digitally connected such as retail industry, finitech are likely to sustain digital gains compared to the traditional agriculture and manufacturing.

Additionally, the extent of this digital transformation among the population segments will greatly rely on Uganda’s capacity to address the digital divide.

 In conclusion, digital infrastructure coverage is critical in ensuring internet penetration in the rural areas.

Mr  Reagan Mugume is a research analyst, EPRC Makerere University.