Ethiopia lost around USD 9 million during an Internet shutdown that occurred between July 1, 2015 and June 30th 2016, a new study by The Brookings Institution, claims.
The study authored by Brookings Vice President Darrell West states that in recent years, a number of countries globally have blocked particular applications, shut down specific digital services, turned off mobile telecommunications services, or disrupted the entire Internet.
“Governments have many reasons for shutting down digital connections: national security, public safety, economic reasons, and wanting to maintain control. Most leaders don’t do research on the consequences. We did our study so that government officials had some sense of the economic damage that results from shutting down the Internet,” West told Capital.
While cutting of Internet connectivity has become a trend in some countries, digital technology has expanded its role in the global economy as both developed and developing nations have become increasingly reliant on the Internet.
“There is a major economic cost to shutting down digital services. It reduces economic activity, decreases tax revenue, and undermines confidence in business and government. For countries wanting to grow in the future, it is vital to keep the Internet up and running,” he said.
The study points out that just last year, Internet blackouts cost countries USD 2.4 billion. The study looks at 81 short-term shutdowns in 19 countries over the past year and estimates their impact on the Gross Domestic Product (GDP) of those nations.
The author states that cutting off Internet or blocking certain social media platforms separates people from their family, friends, and livelihoods, undermines economic growth, interferes with the startup ecosystem, and threatens social stability by interrupting economic activity.
“Many small businesses have moved into e-commerce and online service delivery. This is how they reach markets beyond their own hometowns. Shutting down the Internet or restricting mobile service impedes their business growth and undermines consumer confidence in these firms. Businesses need reliable digital service in order to serve their customers,” West added.
He further stated that lengthy blackouts are likely to cost people their jobs. “If firms are not bringing in revenue, it is hard for them to maintain their workforce and stay open. Digital shutdowns destabilize the market and leads customers to do business in places that are more reliably available,” he said.
Different date shows that back in 2014, 100 million people were using Facebook in Africa, over 80 percent of those via mobile. In 2016, that figure jumped to over 120 million creating even more opportunities for companies to expand their markets.
“Social media sites now serve as a platform for business. People are not using them for socializing but are running businesses through them,” West explained.
According to the findings on different countries, economic losses due to cut off connections include USD 968 million in India, USD 465 million in Saudi Arabia, USD 320 million in Morocco, USD 209 million in Iraq, USD 72 million in the Republic of the Congo, USD 69 million in Pakistan, USD 48 million in Syria, and USD 35 million in Turkey, among other places.
The study further points out that it will only become more expensive for nations to shut down the Internet as the digital economy expands. And without coordinated action by the international community, this damage is likely to accelerate in the future and further weaken global economic development.