Business: Internet shutdowns take their toll on economy





African Business
James Jeffrey
December 29,2016

A young Ethiopian man stands in a crowded city market in an impoverished neighborhood of Harar, Ethiopia while checking his email/African Business
A young Ethiopian man stands in a crowded city market in an impoverished neighborhood of Harar, Ethiopia while checking his email/African Business

Since the government declared a six-month state of emergency at the beginning of October in response to escalating violence from protests seething since November 2015, internet restrictions and blocking of applications have increased in frequency. Beyond simple inconvenience, there is a mounting financial cost.

Internet shutdowns in Ethiopia between mid-2015 and mid-2016 lost its economy about $9m, according to a recent study by the US-based Center for Technology Innovation at the Brookings Institution, part of a total cost for 19 countries (including seven African countries) of $2.4bn.

“Internet disruption slows growth, costs governments tax revenue, weakens innovation, and undermines consumer and business confidence in a country’s economy,” says Darrell West, vice president and director of governance studies at the Brookings Institution. “As internet-powered businesses and transactions grow to represent an increasingly significant portion of global economic activity, the damage from connectivity disruptions will become more severe.”

Modern economies undoubtedly rely on the internet – a dependency that is only increasing. A 2015 Internet Association report found that the web generates around $966bn in the US (6% of the entire economy). Meanwhile, the app economy is estimated to be responsible for hundreds of thousands of US jobs. At the same time, digital technology is a vital part of economic development. A 2012 World Bank analysis found a 10% increase in fixed broadband generated a 1.35% increase in per capital GDP for developing countries.

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