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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.

Topics: Health

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