Month-long internet shutdown cost Ethiopia over $100m: NetBlocks

Ethiopia suffered a loss of at least $100 million due to the internet shutdown the government imposed in July.

This is according to NetBlocks, a group which monitors internet freedom worldwide. It calculated the daily impact of the cut in terms of direct economic costs.

"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.

Economic impacts of blackouts are calculated using the Cost, which was developed by internet access advocacy groups, the Internet Society and Netblocks.

The tool combines telecom industry and development indicators to assess the impact of internet disruptions on digital prosperity.

HIGH IMPACT

The internet and social media blackout in Ethiopia, which lasted 23 days (552 hours), ended on Thursday.

"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 the Nation in an email exchange.

"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.”

These figures primarily represent lost business but also factor informal trade and a degree of lost confidence.

"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."

FOREIGN INVESTMENT

According to Mr Toker, the impact to foreign investment is inevitable, although consequences will be latent due to 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 sectors have also started to become reliant on digital services, so they are vulnerable.

Mr Toker said the shutdown presents particular challenges for international aid projects, which lose the ability to monitor implementation and enforce anti-corruption mechanisms, criteria requisite for the disbursement of public funds and foreign aid.

MOST SERIOUS

Ethiopia's latest communication disruption was the most serious internet cut in terms of severity and duration.

According to Netblocks, it surpassed previously documented incidents in the country including the information blackout imposed following last year’s assassination of five high ranking officials, which the government alleged was a foiled coup attempt in the Amhara region.

"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 the Human Rights Watch (HRW) released in March, Ethiopia shut down the internet eight times in 2019 alone. This was during public protests and in its bid to prevent cheating during national exams.

PM’S WARNING

The rights group further said communication blackouts without government justifications have become routine under PM Abiy’s administration, during social and political unrest.

Abiy, a 2019 Nobel Peace Prize winner has previously warned of permanent shutdowns if people continue to incite deadly violence using online platforms.

He argued that the internet is not “water or air,” that should the be people's priority or right.