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

Discussion Papers 2007, 34, XX S.

Jana Hamdan, Yuanwei Xu


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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.

Jana Hamdan

Research Associate in the International Economics Department

Topics: Health

JEL-Classification: I18;I31;O12
Keywords: COVID-19, Lockdown, Micro-enterprises, Mobile Money, Coping Strategies, Uganda
Frei zugängliche Version: (econstor)