How COVID-19 is Accelerating Digital Transformation in Ethiopia

We are living in an unprecedented time where we are witnessing one of the major changes in the world order as a result of the COVID-19 pandemic. The pandemic has interrupted lives, halted economic activities, and pushed business and the vulnerable segment of the population towards the edge. Governments around the world even the most developed nations have been struggling to support their population and market from collapse.


Although having relatively much fewer cases and a small number of deaths so far, the COVID pandemic has greatly impacted Ethiopia and caused an unprecedented amount of damage while the horizon of the impact is yet to be see fullyn. As of June 2, 2020 Ethiopia has confirmed 1344 cases and 14 deaths. Even though this numbers might be seen as comparing to many other global statistics, it has been spiking lately.


Covid 19 — a Once in a lifetime Phenomena


While the Covid-19 started as a health crisis around the world, it has now morphed into an economic crisis around the world which has played a major role in wiping Billions from the stock market and resulted an all-time low price for commodities like crude oil fuelled by the subsequent measures taken by government and business around the world to mitigate the spread of the Corona virus.


In Ethiopia for example, decisions such as the international borders closing , local travel ban, partial closure of business, and government operation can be considered as the highlights of the Covid-19 mitigation response.


However, in the middle of COVID driven disruptions around the world, there seems to be certain areas of sectors that seem to be benefited from this pandemic. Among those is the Digital economy, which saw a rise in the usage of tech  platforms and services. Global giants such as Amazon have seen a spike in the use of e-commerce services, streaming platforms such as Netflix and Spotify have reported an anticipated growth in subscribers and web conference services such as Zoom and WebEx have seen an unprecedented boost in usage as much as 300% percent due to COVID-19.


A similar trend has happened during the 2003 SARS outbreak in China. At the time, the now e-commerce giant, Alibaba was in the middle of launching its consumer facing marketplace platform called Taobao. While the outbreak has disrupted the economy and forced closure of business operations, it has also impacted consumer behaviour as people who were forced to stay at home to avoid contracting the virus started turning to the ecommerce platforms like Taobab and JD to order online.


In the 2016 book “Alibaba: The House That Jack Ma Built,” author Duncan Clark writes that the SARS outbreak “came to represent the turning point when the Internet emerged as a truly mass medium in China.”


Covid-19’s Impact on the Digital Space in Ethiopia


When we look at our context, various reports and sensing the ground clearly show that Ethiopia is yet to leverage digital technology to supplement it’s economic development.

There have been multiple initiatives that have been started but the progress so far have been lagging behind from where the rest of the world is and even when compared to its neighbours.


Remarkably, COVID-19 is bringing a new dynamic to the context and it seems to be having a positive impact on digitization by forcing people, businesses and the government to embrace digital services at a faster rate.


While the impact of COVID-19 in the adoption and usage of digital tools is expected to touch almost every aspect of business and activities, Let’s look at some of the sectors where impacts have been demonstrated highly in Ethiopia’s context.


Figure 1. Some of the Digital service use cases

Telecom Usage


Telecom usage has been reported to be an area that has been positively impacted by the Covid-19 where the usage has increased tremendously over the last two months. This is more evident on internet usage as it has been reported a massive surge in Home internet subscriptions to the extent of Ethio telecom shops running out of Internet modems and dongles to meet customers’ demand.


The recent price cut by Ethio Telecom which saw up to 65% tariff reduction for residential fixed broadband internet service users, 69% for enterprises as well as offering a new “Stay at home discounted packages”, must have played a significant in encouraging new customers to get connected and stay online longer.


Education


Schools are adopting online teaching tools as the Ministry of Education advocates for the use of digital communication tools. Telegram is currently being used by many private educational institutions to continue the Education that has been halted by COVID. Telegram seems to be the preferred tools for most schools due to its flexible multimedia file sharing and group functionalities.


Some schools are also using locally developed Learning management systems as well platforms like Google ClassRoom. Private colleges and universities have also started offering online class sessions using web conferencing tools such as zoom to conduct lectures while classrooms are shut down due to Covid-19.


In response to the ever increasing use of online education systems , the higher education agency has responded to the extent of drafting a new regulation to guide online education delivery which will surely encourage educational institutions and the private sector to follow the digital route of delivering education digitally.


Ethio Telecom also made The National Academic Digital Library of Ethiopia to be accessed free of Data charge aiming for a Higher Education Teachers and Student to access Educational resources for free.


Public Health


While being at the forefront of combating the Pandemic, the Ministry of health and respective health institutions across the country have managed to integrate digital tools in their Covid-19 response process.


Among these include data collection tools, e-learning platform for frontline workers on Covid-19, call center facilities, web platforms and social media campaigns that enable people to access near-real-time data on the pandemic , and various applications that are used to manage the work process of testing, monitoring, and tracking of cases in response to the COVID-19 pandemic.


Furthermore Ethiopian Public health institute has recently launched a smartphone phone app called “Debbo” which tracks people and alerts them if they have been in close contact with someone infected with coronavirus.

Figure 2. Some of the Digital Tools being used for Covid-19 response


The Ethiopia COVID-19 Response Team (ECRT), which was created on March 16, 2020, from a single tweet and has grown to over 1,400 volunteers from all over the world, spanning 15+ projects. The team has been helping the Ministry of Health and other government entities in various ways and is engaging in different work streams including surveillance, awareness, food delivery, DIY gear, and volunteer training .


E-Commerce and Delivery


Covid-19 has also put the spotlight on the e-commerce sector into the urban mainstream where small and big shops ranging from Hotels to small shops are now setting up shop on social media pages, telegram channels, and e-commerce sites at unprecedented pace.


Taking advantage of the unique value proposition e-commerce offers to maintain social distancing, a flurry of new start-up’s in the e-commerce space that aims to disrupt the market are popping up while those who have been around for a while are aggressively expanding all with the aim of making the shopping experience of urban dwellers online.


Read Our Review of Ethiopian Ecommerce Platforms.


This has created new job opportunities for delivery companies who had a very limited customer base and a handful of businesses as partners are seeing an increased demand for their services.


In the last few months FMCG companies such as beer breweries have started working with ecommerce and delivery companies to avail their products directly at the hands of consumers. The popularity e commerce is also seen generating job opportunities for motorcycle drivers who now are storming around the city with your food and items in their delivery box mounted in the back.


Banking and Payments


COVID-19 has highlighted the importance of digital financial services in reducing physical contact to potentially slow the spread of the virus. As a result, mobile money providers in Africa are lowering or waiving their fees while increasing transaction limits for digital channels. In Ethiopia as well, Amole, M-BIRR and HelloCash, the leading mobile money, ePayment and commerce platforms in Ethiopia also waived transaction fees and provided different supports.


According to the World bank report Eighty-four governments worldwide are making government-to-person (G2P) payments part of their response to the economic and social consequences of COVID-19.


Read Our Analysis On The New Payment Instrument Issuer Directive and The Future of Fintech in Ethiopia


The crisis has also brought a new meaning to cashless transactions where now banks and FinTechs are marketing their product on how safe and convenient it is in sending money through mobile wallets and online channels.


Financial service providers are now positioning their product as a safe alternative to cash-based transactions. Countries in Africa are seeing a surge in usage of digital channels such as mobile money already as a result of Covid-19.


Although we are yet to get official reports on the impact of COVID-19 in the use of digital banking and payment services in the ethiopian context, we can confidently estimate that customers are more likely to embrace digital banking services more than ever in the coming years because of Covid-19.


Furthermore the recent directive by the national bank that limits cash withdrawals would encourage people to further adopt non-cash payment instruments to conduct financial transactions.


On-site Events and meeting Vs Webinars and Web-conference


While COVID has been devastating for businesses and players in the Hospitality industry, Meetings and conferences seem to be moving online despite the situation. The adoption of online meeting and conference platforms has made technologies such as Zoom, Skype, and WebEx a household name in the professional community.


What had been in the past a costly and difficult exercise in organizing meetings, events, public consultation, and discussion requiring budget for hotel, lunch, and so on has now switched to online webinars which cost almost nothing to set up, that can easily be disseminated through social media.


Unlike the old days where you neede to get an invitation and arrange to physically present yourself to the venue (some even flying in to attend), due to Covid-19 now anyone interested can easily access announcements via social media and join the discussion remotely. The use of such online communications tools has grown in Ethiopia due to Covid-19 with almost all government offices including cabinet-level meetings, corporate business, and social events using web conferencing tools on a daily basis.



Government


Government offices have joined the digital era in the midst of Covid-19 as well and are even promoting mitigating technologies for conducting everyday government business. There has been positive progress from the regulatory perspective whereby the government organ is playing a key role in accelerating digital platforms to the extent of setting up a ministerial-level technical working group and subsequent sub-committees tasked into looking into a way to avail government services digitally and fast-tracking enabling regulations.

Figure 3. Prime Minister Abiy holding a virtual meeting with Cabinet Members


Some of the recent developments include the issuance of the long-awaited Payment instruments issuer directive for Fin-tech’s and Proclamation of E-transactions to govern e-commerce and e-government services. In this aspect, the soon to be ratified Digital Economy 2025 strategy prepared by the Ministry of Innovation and Technology would be a welcomed addition to the array of a government push for digital transformation in Ethiopia.


Long-lasting Impact or temporary hype?


The pandemic has brought in a new incentive for individuals, businesses, and governments why for adopting digital platforms to conduct everyday business. It also showed that with the right motivations in place, we can actually learn and relearn our way of life to be able to work remotely (where applicable), use the internet for much more than social networks and entertainment, and engage with each other.


Post- COVID, we can estimate the value and usage of digital platforms and services would continue to grow fuelled by the increased demand for people to avoid physical contacts as much as possible and the fact that regression is not really the sport when it comes to technological advancement such as this.


The demand for digital technologies would only keep growing at the consumer level. This would mean that businesses would need to put digital solutions at the forefront of their operations whether it’s a restaurant, a bank, or an entertainment service company. Businesses would need to re-configure their way of doing business and push past the real and perceived barriers to be able to continually evolve and adopt new digital solutions across the business process.


So what does all this mean?


While we embrace the switch to digital as a positive result, we also need to be conscious of the existing digital divide whereby not everyone has the access to digital platforms and networks which could potentially expand the opportunity gap that already exists.


Therefore, the delivery of essential services such as education, government services should be considerate of those segments of the population who don’t have access and/or ability to go digital. There needs to be an equal effort in availing the necessary infrastructure and creating the basic sensitizations to those who need it, to make sure that our digitization efforts are inclusive as much as possible.


In the case of some services, we may even need to continue in avail digital channels along with the traditional face to face service delivery as an option and not as an overall replacement.


This would also call for Governments to prioritize digital channels as a basis for the functioning of the economy and government services to citizens and making the necessary investment on the required infrastructure to ensure an inclusive and equitable opportunity to everyone.


It’s now evident more than ever that the future is digital and it has tremendous potential to improve every aspect of our lives while we need to be more vigilant to manage the associated challenges that came along including cyber-security, digital identity, privacy issues, and many more.


As a result of the pandemic, life will never be the same for humankind and it’s very unfortunate to bear the sufferings and to have lost so many lives in such a small period of time. Fortunately, it may not be all gloomy for the digital front which has actually gotten a boost from the crisis and has brought digital platforms and services to the forefront of everyday life. This is true for Ethiopia as well.


Recent developments have shown that the pandemic would play an important role in developing countries such as Ethiopia where it will speed up the adoption of digital platforms and services and bring forward digital transformation in the government, business, and individual lifestyles in significant and long-lasting ways.


While it’s very unfortunate that we are going through the Covid-19 pandemic, we would also need to recognize the fact that Covid-19 could be the accelerator we never knew we needed, to transform our country and way of life into the digital era.


As former President Obama Chief of Staff said , never allow a crisis to go to waste.

By Tewodros Tassew

Tewodros is a Consultant specializing in Digital Financial Services, Fintech, Payments, and Tech-enabled services. He can be reached via email on teddytassew@gmail.com

Editing - By Team Shega


The views expressed here belongs to authors. However Shega will correct any Data and informational errors. You can reach out to Shega by email.

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