Everyone and their aunt know that the pandemic led to more people using the internet and mobile applications than ever before. In fact, according to DataReportal, in Pakistan last year, about 11 million people who were not using mobile apps before, started to do so. For context, this is roughly equivalent to the population of Lahore and according to a ranking by the app analytics firm, Sensor Tower, this 21% jump has enabled Pakistan to enter the league of the top 10 countries for app downloads for the first time in the last quarter of 2020.

In 2020, Pakistanis downloaded 2.06 billion apps and generated $60 million (a drop on the ocean compared to the $218 billion worth of apps downloaded globally) – and while this may seem like pocket change, convert it to rupees and it translates roughly into a mega-development project of a city of 400,000 people. (For example, a recently announced project in Gujrat). According to Misbah Naqvi, co-Founder, i2i Ventures, this increased access to technology is the result of cheaper smartphones and a broadband subscriber base of 100 million. In her opinion, both globally and locally, people building apps are becoming better and better at it.

Clearly, therefore, despite the adverse impact of the pandemic on people’s lives and the economy, tech has blossomed, with entrepreneurs leapfrogging two to three years into the future in terms of growth, putting Pakistan, along with Bangladesh, China and India, among the top countries where the next billion internet users are expected to come from. Today we have apps for almost everything, from cute plants that track water consumption to K-Electric providing load-shedding schedules and billing details.

Although the lines may blur, broadly apps fall into three categories: entertainment, communication and information and aid in completing tasks. To find out more about Pakistan’s app universe, Aurora conducted a survey called ‘Are You Part of Pakistan’s Growing App Culture?’ in May. Run on dawn.com and aurora.dawn.com, the survey was answered by about 500 people. Unsurprisingly, it was predominantly answered by male Millennials and Gen Zers (80% from the 18 to 44 age group). Over 70% said they have spent more time on apps since the start of the pandemic – increasing by one to two hours for nearly 40% and 25% spending roughly two to three hours more. Despite this increase in time, the number of apps used daily is mostly one to five.

Made in Pakistan

Talking to various stakeholders, Aurora ascertained that one of the reasons for the increase in usage is the presence in Pakistan of app developers with world-class skills. Although data for the number of new app launches is sparse, investment in tech start-ups can be used as a proxy method to assess the rise of the app culture in Pakistan.
According to Data Darbaar (a platform that provides insights on start-ups), over $66 million was invested in Pakistan through 50 deals in 2020, an increase of 50% compared to 2019. The e-commerce sector witnessed the highest number of deals, although the biggest chunk of the pie (38.5% of the total investment) went to transportation and logistics.

Going by investment, the hottest sectors were fintech, foodtech, software as a service (SaaS), healthtech and e-commerce, and according to Naqvi, the venture capital (VC) model has helped boost app growth because it allows apps to remain in existence for a longer time without being profitable, as a result of which they can spend more on marketing. As she points out, “Careem and Uber are loss-making entities and in a traditional model they would only be able to go so far, but in the VC space they can continue to grow.”

Rise of Super Apps

In the opinion of Shahbaz Ali Jamote, CEO, TelloTalk, (an all-in-one chat app available in Pashto, Saraiki and Roman Urdu), “there is a natural progression; the moment someone buys a smartphone, they set up an internet connection and download some form of a social media or messaging app. In Pakistan, there are more social media accounts than bank accounts.” This is why he believes that social media-based super apps can be leveraged by financial services, e-government services and education.

Super apps are essentially portals for a diverse range of virtual products and services that bundle together online messaging, social media, marketplaces and other services (like ride-hailing). Careem’s super app incorporates ride-hailing, mobile wallets and food delivery. According to Data Darbaar, Bykea’s super app for transportation, logistics and cash-on-delivery payments received the highest amount of funding in the form of $13 million in 2020.

Nevertheless, Jamote argues that the benefits of super apps can only be truly unlocked by a local social network. In his view, regional languages and content localisation are best provided by a native player. More importantly, corporate governance can only be implemented by people on the ground in terms of compliance with local regulations in the financial, communications and government sectors. For example, foreign messaging platforms cannot launch payment services because all the data goes out of Pakistan, creating privacy and other issues; in the case of fraud on a foreign platform, a consumer would be helpless if the platform is not hosted in Pakistan. Another issue is the flight of capital. “People raise a lot of funding as part of the start-up culture and a big chunk of that funding goes to advertising dollars, so people end up spending on Google, Facebook or Twitter. Pakistan’s digital advertising market is roughly worth more than $100 million, but these bucks do not aid in job creation or contribute to taxes,” he says.

A Changing Consumer Delivery Space

Going by the response to the Aurora survey, although the usage of delivery services via apps has jumped during the pandemic, they are not a daily top-used category; rather it was grocery and food delivery apps that witnessed the most revolutionary changes. Quoting i2i Ventures’ research, a report by Al Jazeera stated that “tech companies in the grocery delivery space have raised at least $11.7 million in funding from investors in five separate deals in 2020, making it the second-largest category for tech investors in Pakistan.” In a recent interview with Dawn, Aemad Mehdi, Director Operations, Foodpanda, voiced his expectation that Pandamart, launched at the start of this year, would match Foodpanda’s food delivery business in a year.

Whether this trend is here to stay, or whether consumers will revert to offline grocery shopping, only time will tell. However, given that the e-commerce grocery market is estimated at $50 billion (according to Al Jazeera), even if a small percentage is retained, this still constitutes a significant number. In this respect, coupon books offering deals, such as Bogo (buy one, get one free) and Vouch 365, popular in the past, have morphed into apps, giving them added versatility. In the opinion of Tyrone Tellis, Marketing Manager, Bogo, when Bogo was first launched in 2016, there was no point launching an app because “customers would be left standing at a counter in a mall without a signal, causing unnecessary frustration.” But this changed with the advent of 3G. Then came Covid-19 and with restaurants closed during lockdowns, Bogo changed their model and converted their dine-in deals into delivery deals and added new business categories, such as healthcare insurance, homecare, repair services and e-commerce brands – especially e-grocers. As a result, the usage ratio of books versus the app went from 50:50 to 70:30. Looking specifically at e-commerce, according to DataReportal, apps have helped the value of the consumer goods e-commerce market to increase by 83.5%, nearly touching four billion dollars in 2020. (Compare this to the six billion dollars Pakistan has sought from the IMF.)

Hyperlocal Fintech

More than a third of the survey respondents said they used fintech apps most frequently, including JazzCash, Easypaisa and online banking channels. In addition, hyper local apps are coming up to cater to specific challenges. For example, CreditBook is aimed at solving the cash flow management problems of micro small and medium enterprises (MSMEs). Hasib Malik, co-Founder, CreditBook, points out that “micro enterprises earn very small margins (between two and eight percent) and cash flows tend to be erratic because customers purchase from them and promise to pay later with no interest charged, which causes cash flows to go out of whack, and because of this instability these businesses cannot reinvest.” By digitising their physical accounts, CreditBook also helps prevent problems arising from calculation errors and illegible writing.

Part of CreditBook’s value proposition is the fact that they understand the issues arising from financial exclusion in Pakistan. Their customers usually come from Tier 2 and Tier 3 cities who have a degree of formal education and a take home amount equivalent to roughly Rs 60,000 a month. Available in local languages, CreditBook is a good example of how apps can solve problems arising in remote areas of the country and within segments that are not tech-savvy. Similarly, the Government of Pakistan’s Ehsaas Savings Wallets is an app that enables beneficiaries to save or withdraw money from digital wallets, thereby increasing financial inclusion across Pakistan. Gen Zers and Education

Despite the pressures created by the pandemic, education apps were a top priority for only a fifth of the respondents to our survey. This could mean one of two things; either parents were not able to wrap their minds around their children attending school through a screen, or given that the respondents were mostly male (fathers), their input in their children’s educational screen time was limited.

“While fairly new in Pakistan, edtech is the most valuable space in the tech start-up sector,” says Fahad Tanveer co-Founder and CEO, Edkasa, an app that helps students prepare for their matric and intermediate board exams. Launched in April this year, Edkasa had 70,000 downloads in their first month of operations, indicating a clear need propelled by the pandemic.

Although the medium of studies is English, the lessons are explained in Urdu and contextualised for Pakistan. In order to engage 13 to 18 years old students in this space, Edkasa’s videos are curated like TikTok in terms of length, content and language in order to create visually stimulating videos. In this regard, Kalsoom Lakhani, co-Founder, i2i Ventures, adds that “Gen Z are a lot more visual and while Millennials are more aspirational (think Instagram), Gen Zers are creators and micro-influencers in their own circle of equals (think Ted Talks). They are digital natives compared to Millennials.” Given Pakistan’s youth bulge, the psychology and tech savviness of children today will play a big role in driving the apps of tomorrow.

Shopping, Entertainment and the Ultimate ‘Time Pass’

In Pakistan, the entertainment and communication spaces are dominated by Snack Video, TikTok, Snapchat, WhatsApp and Facebook (as ranked by Apptopia). Social media apps are the most lucrative for marketers, given that advertising on them can reach at least a third of Millennials and Gen Zers, according to DataReportal. However, this audience is mostly male given the high male-female gap in terms of mobile ownership.

In terms of pure entertainment, according to the Aurora survey, the least popular category was gaming; over 65% of respondents said they don’t play games and 23% that they limit their gaming time to an hour or less. Furthermore, although streaming has increased worldwide and Netflix claim to have added nearly 16 million new subscribers last year, in Pakistan TV still reigns supreme with 40% of respondents saying they don’t watch shows or movies on their mobile and 27% saying they stream for an hour or less. Nevertheless, it is impossible to own a smartphone and not use apps throughout the day, whether it is to track an ex’s life on social media or while away time. Apps are probably the ultimate ‘time pass’, as termed in local lingo, a fact corroborated by almost all respondents of the survey who said they use apps while waiting for someone or when alone. Apps are also popular before going to bed, suggesting that they are part of the unwinding process for many people.

Clearly, given the number of local and international apps focusing on the Gen Zers who will become the leaders and workforce of tomorrow, there seems to be little room for doubt that apps are set to continue to permeate every aspect of our lives across all ages and social strata. The app culture in Pakistan is just starting.

Mini Feature: Why Apps Fail

"We won a grant from Stanford University based on the idea of creating a learning platform for the underprivileged. After talking to people from slums we realised they wanted an avenue to generate an income, says Muhammad Mustafa, co-Founder, Mauqa Online, an app that provided on-demand domestic help in Islamabad, Lahore and Rawalpindi. “That is how we happened on the idea of Mauqa. We started with a Facebook page.”

Within 45 minutes they received their first request – even before they recruited staff. “I went and ironed for three hours. We could not let our first customer request go unanswered.” Initially, Mustafa and his wife managed the administrative tasks themselves, using a call centre and spreadsheets to track orders. However, the call centre became increasingly expensive and unreliable as volume increased, necessitating an app.

At their peak, Mauqa Online served 10,000 customers over 80,000 hours with 300-odd helpers. The pandemic brought this down to less than half. Unfortunately, their story has a sad ending. Mustafa had to shut down the app due to decreasing volumes and the inability to expand into Karachi. “We raised funds to operate in Karachi but due to the tightening of the regulatory environment by the Financial Action Task Force (FATF), our funds were stuck,” Consequently, they decided to shut down while they could still pay their dues.

Of the thousands of apps launched daily all over the world, only 0.01% are successful. Misbah Naqvi, co-Founder and Partner at i2i Ventures, whose company has helped launch six apps in the last 18 months by providing seed funding, explains why. “Either app does not address a need or does not have enough engagement from customers. The latter could be because cheaper and efficient options are introduced later. Or, consumer behaviours change, or users simply get bored and the app can no longer generate revenues.”

Fatima S. Attarwala is an analyst at Dawn’s Business & Finance. attarwala@gmail.com