Internet shutdown stalls businesses, government agencies 

A customer checks for goods online. The internet shutdown majorly affected online businesses. PHOTO/ RACHEL MABALA

What you need to know:

  • In an earlier interview last week, Mr Peter Kawumi, the chairperson of Financial Technology and Service Providers Association, told Daily Monitor  that on a daily basis 300 million transactions are carried out by means of Fintech system alone in the country.

The Internet shutdown that started on January 13 has caused huge losses as businesses, government agencies, organisations and web-based operations such as e-tax payments were disrupted for five days.  

The State action has been described as inconsiderate due to the modern ways of conducting business through e-commerce. 
On the eve of the election, government shut down Internet citing security reasons during the elections for President and Members of Parliament. 

The banking and telecom sectors admit their operations were disrupted but most players in various sectors remained tight-lipped on the details of the impact . 

“It is still very early. We cannot compute that,” Airtel Uganda Communications Manager Sumin Namaganda said. 

Dfcu Bank’s managing director Matthias Katamba said: “We will compile the impact now that we are back in office. The Internet is back and ATMs were working at the weekend. We will be able to tell full extent in time.”

The executive director of Uganda Bankers Association, Mr Wilbrod Owor, could not quantify the impact of the shutdown, saying  it will require an audit.  Daily Monitor learnt that besides low activity in the banking sector, there is fear of banks losing money at the hand of cyber fraudsters. 
 Shutting down of the Internet affected payment systems, Real Time Gross transfers and Electronic File Transfers for the large transfers. This is in addition to the 13,000 bank agents who conduct money transfers, Internet banking and the Automatic Teller Machines.  

Mr Owor said: “Right now we are focusing on the Internet being back to try and restore the various payment channels and services. My attention is on that first before I can go into the impact details. Obviously, it has impacted but we want to make sure all member services are back.” 

“This complete shutdown froze our business operations. We could not make transactions, people could not access the app, and Zoom meetings were put on hold so I would term the shutdown as an attack on the economy,” SafeBoda co-founder and director Ricky Thomson said. 

The app is used by riders to pick up passengers, buy airtime, deliver packages and groceries. 

“We have a community of 22,000 riders, each earning between Shs30,000 and Shs50,000 per day and that should tell you how much has been lost,”  Mr Thomson says.

“Most of us in the tech world raise funds globally. For other young innovators to continue growing, they need access to funding. Most people who invest in this sector have a comprehensive understanding of what is happening. This kind of shutdown sets a very bad reputation for the country. The next move should be to prevent it from happening again. Also, someone must be held accountable and there should be some compensation,”  he said.

At Jumia Uganda, an online shopping store, business operations shut down. 

“Cash reconciliation was very difficult because it relies on Internet and the whole supply chain suffered. Some products like food, medicines and groceries are essentials, so consumers were affected,” Mr Ron Kawamara, the Jumia-Uganda managing director, says.

He asked government to be transparent to allow businesses plan better and minimise financial implications. 

As a result of the Internet blackout, the leadership of Fintech industry players in the country estimate that about Shs666 billion was lost on a daily. 

Financial technology has grown to become an industry whose platform is being used to improve activities in telecommunication, banking and finance. It generally allows the payment system and money transfer to seamlessly happen irrespective of the location. 

In an earlier interview last week, Mr Peter Kawumi, the chairperson of Financial Technology and Service Providers Association, told Daily Monitor  that on a daily basis 300 million transactions are carried out by means of Fintech system alone in the country.

“On monthly basis, Shs2 trillion is transacted by means of Fintech system. What this current shutdown in the Internet means is that money is not being moved because the Internet system is down,” he said. 

Mr Solomon Kitumba’s Swipe2Pay App presents a grim effect of the shutdown. The FinTech company used by small businesses to track cash flows, manage inventory, accept cashless payments and generate comprehensive data on business performance handles a minimum of 150 transactions a day. 

“We transact up to Shs35 million to Shs45 million a week and this is from small businesses. Our business is more than 99 per cent online and these last days we were in an operational, financial and transactional blackout. We work with foreign service providers who we could not reach, which is bad for business,”  Mr Kitumba said. 

Missed revenue opportunity
The Internet was switched off on the day when companies were supposed to be filing their tax returns. This means that close to 18, 000 entities, according to URA tax register, did not file tax returns.  

The URA public and corporate affairs manager, Mr Ian Rumanyika, said taxpayers who were supposed to pay taxes by that date will not be subjected to fines and other penalties because it was a matter that was beyond their control. They will now, however, be expected to be ready by January 20.
“But from the custom points where international taxes of Shs24 billion is collected everyday largely through digital platform enabled by Internet, data entry were captured manually.

 Given that it was a public holiday there no much activities in terms of clearance. With the resumption of the network, it will be captured in the system and those that didn’t clear tax obligation will be compelled to do so. 

“About 800 to 700 trucks are cleared everyday by URA across the custom points. On a public holiday, the number of cargo for clearance drops by nearly 50 per cent,” he said. 

Earlier, the Senior Public Relations Manager Civil Aviation Authority, Mr Vianney Luggya, told Daily Monitor that all flights at Entebbe airport are operational much as the check-in processes were briefly done manually.

The Association of Uganda Tour Operators chairperson, Mr Everest Kayondo, said the Internet shutdown on the tourism industry was massive, considering that the industry is already suffocating from the effects of Covid-19 pandemic. 

Mr Kayondo, who is also the chairman of Kampala City Traders Association, said they have been rendered useless as they are unable to make bookings and orders.