Digitalization and Resilience to COVID-19 Shocks: Evidence from Sub-Saharan Africa

October 25, 2021 by Ruifan Shi
Ookla Digital Development

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Challenge

The COVID-19 pandemic has brought major disruption to economic activities and human welfare across the world. Despite the pandemic’s late arrival, Sub-Saharan African countries were faced with unprecedented challenges to contain the spread of the pandemic and mitigate the damage to the economy. The government’s containment measures to slow down the spread of the virus have also taken a heavy toll on households' welfare. The closure of businesses and markets leads to a decrease in household income and consumption. The restrictions of movements result in job loss and a lower labor market participation rate. The closure of schools and disrupted educational activities would negatively impact human capital accumulation and long-term productivity.

Solution

Recent research has shown that digitalization increases firms' productivity and household welfare in Sub-Saharan countries. During the pandemic, digital technologies enable government, businesses, and society to continue to function during a time of physical distancing. Digital access to online banking, social assistance programs, and job market information allows households to smooth their consumption during the pandemic. The critical role digital access plays in increasing household resiliency has become aware to the governments, and many African countries are seizing this opportunity to improve their digital infrastructure. With the purpose of informing policymakers and facilitating policies that promote digital connectivity and building household resiliency, this empirical study assesses whether households with mobile connectivity withstood COVID-19 shocks better regarding income, employment, food security, and education.

Impact

Utilizing a rich set of data ranging from household surveys (High-Frequency Phone Surveys on COVID-19) to spatial datasets such as CoverageRight™ by Ookla® available through the Development Data Partnership, this study finds that digital connectivity enhances households' resilience to shocks during the pandemic in three areas: market access, employment, and human capital development.

Below are some major findings:

• Smallholder farmers have better access to the market to sell agricultural products (Having access to 3G (4G) network would increase the likelihood of farmers selling crops to market by 16% (25%));
• Households have a higher chance of starting family businesses for additional income (Having access to 3G (4G) network would increase the likelihood of starting family businesses by 5% (8%));
• Waged workers are more likely to stay employed during the pandemic (Waged workers who have access to 3G (4G) is 5% (16%) more likely to stay employed during the pandemic);
• School children are more likely to continue completing school assignments despite school closures.