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Ethiopia Suffers Sh10 Billion Loss Following Internet Shut Down


Ethiopia is still reeling from the effects of the 23 day internet shut down in July. Prime Minister Abiy Ahmed imposed the shutdown following the protests demanding justice for the killing of Oromo musician, Haacaaluu Hundeessaa.

The country suffered a loss of at least $100 million (Sh10 billion) following the shutdown. This is according to NetBlocks, which monitors internet freedom worldwide. The firm calculated the daily impact the shutdown had on Ethiopia’s economy.

“Beyond the impact on fundamental rights, each day of an internet shutdown in Ethiopia runs up a bill in excess of $4.5 million, in terms of the economic impact to the GDP according to the Cost of Shutdown Tool (Cost),” it said.

The economic impact of an internet shutdown is calculated using the cost. The formula was developed by internet access advocacy groups, the Internet society and NetBlocks.

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The formula combines the telecom and development indicators to assess the effects of internet disruptions on digital prosperity.

The internet shutdown in Ethiopia which resulted in a Social media blackout, lasted 23 days (552 hours). It was restored on Thursday, July 23.

“The 23-day shutdown had an estimated economic impact in excess of $100 million on the country’s economy,” Alp Toker, NetBlocks’ Executive Director, told Nation.

“The Cost, incorporating the Collaboration on International ICT Policy for East and Southern Africa (CIPESA’s) economic model, indicates direct and indirect losses are divided evenly, with approximately $50 million in the net direct impact and the remainder representing indirect losses.”

The figures represent lost business, informal trade and also factors in a degree of lost confidence.

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“Given the extended duration of Ethiopia’s shutdown and heightened reliance on digital communications during the Covid-19 pandemic, we believe the overall impact to be somewhat higher.”

According to Mr Toker,foreign investment takes an inevitable hit, although the consequences may be latent owing to the time it takes to update and re-evaluate risk assessments.

“Businesses which rely fully on cellular internet connectivity to yield returns or achieve social impact become inherently less attractive to investors,” he said.

Ethiopia’s traditional business sectors, which have also started to go digital, are now vulnerable to the effects of the shutdown.

Mr Toker also said the shutdown presents challenges for international aid projects as they are not able to monitor implementation and enforce anti-corruption mechanisms, all which are criteria for the disbursement of public funds and foreign aid.

The latest shutdown is said to be the most serious in terms of duration and severity.

According to NetBlocks, the shutdown was the worst compared to the previous in the country, including the blackout imposed in 2019 following the assassination of five high ranking officials, which the government alleged was a foiled coup attempt in the Amhara region.

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“This is Ethiopia’s second extended telecommunications blackout in two years and alarm bells will be ringing for investors as the viability of Prime Minister Abiy Ahmed’s reforms are cast in doubt,” Mr Toker told Nation.

According to a report by the Human Rights Watch (HRW) released in March, Ethiopia shut down the internet eight times in 2019 alone. This was effected during public protests and in efforts to prevent cheating during national exams.

The HRW said that under PM Abiy’s administration, internet blackouts without government justifications have become a norm and are effected during social and political unrest.

A 2019 Nobel Peace Prize winner, Abiy has warned of permanent shutdowns should citizens continue inciting deadly violence using online platforms.

His argument is that the internet is not “water or air,” and that it is not a right or a priority.

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Written by Vanessa Murrey

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