A huge blow to the economy is one of the obvious effects of the internet blackout that did not spare financial technology companies also called Fintechs in Uganda are making losses of over an estimated shs66.6 billion that they would usually receive daily before this blackout. The blackout that lasted almost a week has caused some real damage in such a short amount of time. In 2021, the internet has become a source of income as many businesses have taken advantage of advancements in technology to make money.
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Financial technology has grown explosively in recent years in Uganda as Fintechs seek to improve service delivery for consumers. They rely heavily on the internet to improve and automate financial transactions.
With Fintechs, it is possible to manage funds in your bank accounts, trade stocks, pay for food, do online shopping or manage insurance all with your smartphone through this technology.
Fintechs in Uganda could decline after immense growth in past years.
Uganda has one of the highest numbers of Fintech startups in Africa. The growth of Financial technology companies in Uganda which was recorded as over 35% in 2018 is a good economic indicator but could quickly decline as Fintechs in Uganda are making losses due to recent events since the internet which is the backbone of this industry was recently shutdown.
It is believed that there has been a huge impact on several businesses by this shutdown which hasn’t been fully ascertained at the moment. Mr Peter Kawumi, the Financial Technology and Service Providers Association chairman said, “On a monthly basis. Shs2 trillion is transacted through Fintechs. What the current shutdown means is that money is not moving. Most of our systems depend on the internet.”
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Banking services were also notably slow as a result of this shutdown. According to Daily Monitor, the Uganda Bankers Association executive director, Mr Wilbrode Owor said yesterday that the banking system had specifically experienced a slowdown in the internet banking and bank to wallet transactions.
“Agent and Internet banking Automated Teller Machines (ATMs) cannot transact. We hope this does not take long. This could be a security matter, but we have to consider the wellbeing of the citizens since the Internet is used for many things”, Mr Owor continued to say.
Other areas making losses because of the blackout.
As Fintechs in Uganda suffer potential huge losses, air transport was also badly hit by the shutdown as many people use the internet for online booking of flights. However, Uganda airlines managed to rely on its manual system as an alternative for the time being hoping that the internet will be back soon.
“For now since the internet is off, we are using the manual system to manage,” the Emirates county manager Mr John Gemin commented.