Published in Sep-Oct 2019
The opportunity: Pakistan is on the cusp of a digitisation explosion. Rarely has there been a time in its 72-year history that a new approach (in this case digital and technology) held so much promise and potential and where, with a few tweaks in policy and improvements in IT and telecom infrastructure and connectivity, e-commerce, digital finance, education and agriculture, we can collectively make a significant impact on growth. Here are some facts to support this claim.
Sixty-four percent of Pakistan’s 210 million population is below the age of 30. This equates to about 135 million Millennials – a generation perceived to be the driver of technological innovation across the globe. (Pakistan Census Data)
The median age of ‘digitally savvy’ youth demographic for Pakistan is 22 years. The average for most other countries is much higher. (UNDP, 2018)
Pakistan has 154.3 million mobile phone subscribers, 70 million are using 3G/4G and the annual growth is 5.6% (Hootsuite)
Pakistan’s tele-density is 73% (Google)
There are 48 million wired/WiFi internet subscribers as of 2018. (Google)
E-commerce stands at almost 100% year-on-year growth for the past five years. (Google)
Eighty-two percent of consumers with access to the internet in urban areas have made an online purchase by 2018, up by six percent from 2017. (Nielsen 2018 Connected Commerce)
Thirty-seven million active social media users growing annually at 5.7% and Facebook representing 87.98% of usage (Statscounter)
The reality: Although the stats seem impressive on the digital availability side, much needs to be done on the digital thinking and digital literacy side of the equation. Digital literacy will require a concerted effort from all stakeholders, and as a developing nation Pakistan faces the typical multi-pronged sword of lack of talent, funds and synchronisation. Pakistan’s digital efforts are mostly made on an individual basis and do not equate to an overall direction-setting, which is essential to achieve systematic change. The stakeholders that matter are many. Let us explore a few that are front and centre of much of the recent efforts in leading this effort.
1. Academia: Academia is typically looked upon as the key driver of such mind changing initiatives as it aims (or in our case claims) to produce the human capital required to run organisations, reduce skill gaps and bring in the change needed for an economic shift. Unfortunately, a lack of vision leads to an outdated curricula that directs high school level students towards learning Windows XP and using CD drives instead of the basic elements of social media/data/cloud/AI that the world has moved on to. Colleges and universities lack specialised programmes and R&D grants for such advancements, and while data, analytics and other digital programmes have mushroomed across the board, no clear direction has been set by the Higher Education Commission (HEC) to map these learnings according to a need-based analysis of the skills for the future.
2. Industry: In Pakistan, no one industry is similar when it comes to digital adoption. The bulk of the innovation and ideas is coming from digital natives such as Careem. The dynamic shift, where competitors arise from all angles (and many industries are playing against each other) is not only new but a prime example of the growing digital and converged ecosystem of the future. These disruptions are a result of learning the customer landscape, the core tenant of which is the collection and analysis of the right data. To do this, industries need the right vision, the right processes and the right technologies.
The telecommunication giants are leading the digital pack (partly because they collect and own the data produced from mobile commutations and can make meaningful decisions and pivots in strategy). These companies have invested in technology incubators and accelerators. Telenor have their own accelerator called Telenor Velocity and in 2016, Mobilink/Jazz partnered with the National Incubation Center (NIC) to form Jazz xlr8. These investments have resulted in valuable tech solutions that have enabled these companies to branch out and compete in other sectors, such as payments and microfinance solutions.
Banks are constantly hit by competitors from other industries as they are mostly clueless in their approach to the future. Although most banks have developed a smartphone application, they do not have a coherent strategy on how to become digitally-enabled financial product organisations. Many have introduced digital divisions that run like Fintechs but they are struggling to bring this together as a single strategy. And while wallets and apps are mushrooming, the transactions that can be performed through them are extremely limited. However, HBL have claimed to have been able to successfully disburse one billion rupees in loans through their app (which can be considered a benchmark given where others are) but the lack of interest/ability from other banks has been a significant barrier for development and digital inclusion in an already capital starved environment.
None of the other sectors have made significant digital strides. The pharmaceutical industry, which can easily benefit from an automated supply chain (IoT, Blockchain, etc.) is clearly not there. Agriculture, which accounts for 25% of Pakistan’s economy, is in its digital infancy. Some telecommunication companies and banks have made some strides towards digital agri-solutions and even the fertiliser industry is smartening up to automation, but a lot more work is needed across the board in almost every sector.
3. The start-up ecosystem: The influx of innovators, investors and influencers (foreign and local) has brought its own brand of digital thinking into the mix. Apart from well-known stories about Careem’s and Daraz’s takeovers, there are many others such as Bykea and Sastaticket which have used local and foreign investment venture funds to grow. Some outfits that have invested in early to mid-stage start-ups in Pakistan include Fatima Ventures,Gobi Partners, Invest2Innovate and TPL e-Ventures. They bring in not only the money but the expertise. The bulk of these innovations are housed at multiple incubators and accelerators such as the NIC, NEST I/O and Plan9.
4. Government: If the Prime Minister’s IT Task Force and the Presidential Initiative on AI are an indication of progress then yes, there is progress. Are these initiatives mature enough to have a trickle-down effect where things start to matter? The answer is no. Still, some of the initiatives made by the government have been commendable. The National Database and Registration Authority (NADRA) system is a brilliant initiative and is a foundational advantage Pakistan has over others. Every citizen is captured on the grid (which is a foundational requirement to build upon in the digital landscape). The Pakistan Citizen Portal where all government related complaints can be launched is an excellent example of how a centralised technology solution can insert transparency and transform an industry that typically lags behind in the use of technology. The government is also stressing the need for more IT-related exports. Software houses have been given incentive to build and export more. Efforts in inviting global tech players (Google and Alibaba, among others) need to be encouraged. The infamous ‘Why is Paypal not in Pakistan?’ phenomenon has been the source of many jokes in tech circles, largely because it demonstrates the overall lack of government understanding about the financial infrastructure required to accommodate Paypal and similar ventures. The government (to its credit) has launched multiple digital skill development programmes aimed at aiding the freelance space. While such initiatives are commendable, they are not enough to set Pakistan up for digital success. The government needs to initiate public-private partnership programmes that will collaborate in sustainable and profitable ways to give the ecosystem what it needs.
The way forward: The opportunity is massive. The impact can be massive. The human capital exists, the foundational elements of infrastructure required to build a digital landscape exist, a policy exists. The only thing needed is the overall understanding of this phenomenon, the will of the people (and the leaders) and a collective partnership between all stakeholders to take it where it needs to go. And if this happens, there is no stopping digital Pakistan.
Javaid Iqbal is the CEO of TransformX, a global consultancy in the digital customer transformation, disruption and innovation space. firstname.lastname@example.org