As 2022 ends and industries around the world become progressively dependent on cuttingedge technologies for efficiency, productivity and re-useability, legacy industries need to transform to the new tech-enabled normal to have a shot at survival. The fourth Industrial Revolution framework (by the World Economic Forum) is essentially a guide to this normal, and attempts to bring such technologies to the cognitive domain where heavy reliance on knowledge ecosystems, investments in AI, IoT, 5G, autonomous vehicles, digital payment gateways, healthcare sensors and much more define the construct of a modern tech economy. While much of the developed world has a grip on all this, developing nations are still building the rails of the third and fourth revolutions. But Pakistan, despite its multitudes of challenges, seems to be on the right path.
I clock my version of Pakistan’s ‘tech’ time to early 2017, when during a seminar I hosted at Karachi’s Institute of Business Administration (IBA) called ‘Digital Innovation for the Next Generation of Customers’, three esteemed panellists that represented large enterprises (Engro), family businesses (IBL Group) and startups (Careem), spoke about the perils of Pakistan’s foundational elements of a tech economy, and to put it simply, there wasn’t much.
During the same time, project pitches aimed at creating digital transformation roadmaps and studying the digital maturity of organisations would pose questions to my team and I at TransformX, such as ‘what does this digital do for me?’, (yes, by the CFO of a large bank) and it simply summed up the reality and the mindset. But by 2019, during my research for an Aurora article I authored, Turning Digital Pakistan into a Reality, I could see islands of excellence mushrooming all over just waiting to be interconnected for success in the larger cause. Today, it is on the way to centre stage, but as always, a lot still needs to be done.
Recently, while reporting on Pakistan’s tech ecosystem, McKinsey commented, “with a massive young, English-speaking population and a fast-growing, tech-savvy middle class, Pakistan has many ingredients for a thriving start-up ecosystem.” A population of 230+ million (fifth largest and 22.7 as median age) provides a young, aspiring, luckily techsavvy, English-speaking, and cost-efficient workforce and can surely pay economic dividends for not only the country but also for foreign investors eyeing growth. Fuelled by young entrepreneurs, this growth in tech has been 30% YoY and contributes $3.5 billion to Pakistan’s GDP officially, with a projected growth of 100% YoY for the next five years.
Copious levels of e-commerce, start-ups and tech enterprises are transforming legacy industries through tech adaption focusing on digital infrastructure, innovation and entrepreneurship, digital skilling, e-government, connectivity and R&D. While it takes a multitude of moving parts (and time) to build such systems of growth (especially in the developing world), below are some themes and realities that have contributed to the pivotal areas of this growth in Pakistan. The gaps and suggestive future paths are also included.
1. Tech Laws, Policies and Frameworks: In the past two decades, successive legislative, legal, strategic and policy instruments have built Pakistan’s tech and digital foundations. Some prominent ones, such as the State Bank of Pakistan’s (SBP) Payment Systems and Electronic Fund Transfer Act, Customer’s Digital Onboarding Framework and Holdco rules liberalisation, Ministry of IT/ Telecom’s National Cyber Security Policy, Digital Pakistan Policy, Telecommunications Policy, Mobile Cellular Policy, USF Policy (for cellular infrastructure in remote areas), Rolling Spectrum Strategy, Cloud First Policy, Special Technology Zones Act by STZA, Ministry of Commerce National E-Commerce Policy, Intellectual Property Act by Intellectual Property Organization of Pakistan, Presidential Initiative on AI, Securities & Exchange Commission of Pakistan’s Regulatory Sandbox, Higher Education Ordinance by Higher Education Commission (HEC), National Science Technology and Innovation Policy of Ministry of Science and Technology – all provide legal coverage, policy guidelines and support to the tech ecosystem of Pakistan. Considerable achievements notwithstanding, many policies require crafting/upgrading to cater to the ever-evolving needs of governing tech. The Convention on Cybercrime (The Council of Europe) was not signed by Pakistan, therefore there are no model clauses for cross-border transfer of personal data (GDPR equivalents in Pakistan), no law for trade secrets and their protection, no protection of NDAs that do not allow the third party to breach confidentiality, no tax regimes that allow competitive financial instruments that make foreign destinations attractive to keep funds in, no laws exist to recognise/regulate blockchain and cryptocurrency, and the list goes on.
2. E-Governance and Citizen Services as Tech Enablers: Offered by the National Database and Registration Authority, foundational services like identity verification, authentication, travel documentation, etc., have become progressively sophisticated and interconnected. Similarly, the National IT Board led the digitisation of federal government functions and Punjab/KP IT Boards took the lead on the provincial side, especially the recently launched GoPb (GoPunjab app) that assists in many aspects of citizen engagement with the province, including registration of businesses, payment of tax, fees, challans, and transfer of motor vehicles. Other provinces are behind but making strides, especially Gilgit-Baltistan that is now testing robotics labs with trainers merged into IT labs of the government schools.
3. Infrastructure & Hardware/ Software/Internet/Broadband Availability: Teledensity at 88.21%, 195 million cellular subscribers (not unique), 120 million 3G/4G and 123 million home/office broadband subscribers (and growing), 24.66 million locally manufactured mobile phones in 2021, 40,000+ 4G enabled mobile cell sites (PTA data), geographic connectivity of remote regions under CPEC and the Universal Service Fund (USF) and the Special Communications Organisation for telecommunications, make for good progress. This ‘Digital Triad’ of fibre, wireless and satellite should be interoperable and made available to citizens without complicated licenses (hence cheaper) for enhanced digital connectivity. Many midsized cities still have very limited 2G/3G/ Edge connectivity making it hard to participate in internet-enabled commercial/educational activities. Similarly, for laptops, desktops and mobile phones, the government in the past provided solutions for young people through the Prime Minister’s laptop schemes. But since the culmination of such programmes, coupled with the rising dollar rates/inflation, it is hard for lower-income families to be a part of the software/freelance economy. Qistbazaar, Kistpay and other buy now pay later outfits are helping with their easy instalment solutions, but a lot more needs to be done by all stakeholders.
4. Tech as a National Narrative and Imaginative Capture: Like cricket, tech needs to be lived, breathed and supported by political, civil, judicial, military and all stakeholders in the country. The ‘Tech Destination Pakistan’ initiative by the Pakistan Software Export Board is an example of global brand building that adds to the Pakistani image of producing traditional products like textiles, mangoes, kinoos and pink salt. This narrative should be supported by tech festivals/ competitions at a national scale, along with the celebration of success stories of tech heroes. Furthermore, every foreign mission of Pakistan should play their part in enhancing this image, including knowledge of national and local tech events that have consistently showcased innovation and disruption (+92Disrupt, Momentum, ITCN, Pak Launch, Future Fest, CXO Forum, She Loves Tech, Leaders in Islamabad, to name a few). Furthermore, social media influencers should support tech awareness (the same way they do for politics) so young people, their parents and elders comprehend tech for widespread encouragement. Also, Pakistan’s large businesses, high net worth individuals and family offices must learn, invest in and encourage tech investments, leveraging examples of the likes of Tata, Reliance and others in India that helped build their tech economy.
5. Tech for Crisis Management/ Poverty Allevation/Financial Inclusion/Tax Collection: The pandemic showcased the effectiveness of mission-driven collaboration between public and private sectors with strategic tech solutions and players. Tech led the enablement of the National Command and Operations Centre for citizen awareness, registration and vaccination that laid the foundation of cohesion between policymaking, telecom, data fusion, communications, and healthcare verticals. Similarly, social welfare projects like the Ehsas/Benazir Income Support Programme harnessed the contours of the digital economy - e-commerce, logistics, telemedicine, edtech, urban mobility, business communications, food delivery services for 32 million households across the country (Pakistan’s e-commerce numbers projected to be at $9.1 billion by 2025 (source: Statista). Financial inclusion is being carried out through various categories of wallet accounts (some telco-enabled), microfinance banks as well as the RAAST Instant Payment System launched by SBP to facilitate B to C and B to B payments. However, tax collection remains a major challenge, as only 21% of Pakistan’s population operates a bank account and many, including all in agriculture, do not partake in the tax net. Tax collection should be at least 10 times what it is if we are to have a shot at an economy, let alone a tech one. Maybe tech is the magic to end agri’s official ‘no tax regime’ by unofficial ‘tax traps’ through automation. Initiatives by Engro, Fauji Group, Fatima Group, Syngenta, Bakhabar Kissan, Uptrade and others can be considered good first agritech steps, but soil patterns, weather impacts, agri-marketplaces and dealer/broker/farmer education still need improvements to leverage tech for documenting the agrarian economy.
6. Tech Investment Climate and Incubators/Accelerators: Top global investors, like First Round Capital, Kleiner Perkins, Tiger Global, Prosus, 20VC and Buckley Ventures have made initial investments in Pakistan and regional ones like Shorooq Partners UAE are looking to establish offices. This highlights the market potential of one of the fastest-growing tech ecosystems of the region; one which attracted innovation funding of $368 million in 2021 and $284 million in the first half of 2022. A homegrown VC ecosystem is also mushrooming with i2i Ventures, Sarmayacar, Indus Valley Capital, Lakson Investments, Fatima Gobi Ventures, Zayn Capital, Salt Ventures and others. These efforts have been pivotal in grooming Pakistani talent, enabling an environment of growth for start-up founders and mentors (especially from the Pakistani tech diaspora) and nurturing an ecosystem of 80+ tech incubators and accelerators. What is missing are ‘Structured Financial Frameworks’ and ‘Ease of Doing Business’ mechanisms by the government. Tech investments, internal or external, need these mechanisms and in their absence, freelancers, entrepreneurs, VC firms, and small and medium tech organisations operating in the digital economy face challenges in receiving and transferring income from overseas to Pakistani financial institutions. Tax rebates should be given on startup investing just the way they are given for mutual funds and insurance companies.
7. Tech Skills for All: The integration of national intellectual resources is needed to unlock tech-enabled economic independence, as the country’s 600,000 (25,000 additions/year) tech-focused professionals are not enough. To solve this, Pakistan’s 283,744 public/private schools, 35,000 madrassahs and 244 universities need to build consensus on one tech curriculum that is industry relevant and global. The quality of delivery of all educational institutions (physical, virtual and vocational) has to be ensured and this human capital development effort should be treated as a national emergency for 130 million+ young people at all levels. Primary and secondary schools should lay the foundation of tech education for all, and the HEC should make at least one tech skill a mandatory requirement for graduation at any level regardless of major or domain (BA/BSc/BCom/ MBA/MBBS etc.). Moreover, the country’s higher education institutes like IBA, LUMS, IAS and NUST must offer globally competitive tech executive training programmes for mid to senior-tier working professionals and governance-focused outfits like PICG and ICAP should train the board of governors on ‘Tech Governance’. For noncollegiate (and shorter term) skill building, specific area boot camps in partnership with international firms that excel in the space and provide specific certifications and guaranteed jobs. Existing training centres (of all kinds), IT labs of schools, colleges, universities, and tech firms that have excess capacity can be made available for these initiatives. Private sector instructors can lead these efforts in partnerships with government entities. Also, Pakistan can support US/China semiconductors industry for design and testing purposes.
8. Tech as a Non-Political Agenda for the Country Under One Body: At present, 40+ public sector entities (ministries, authorities, commissions, councils etc.) operate in silos throughout the science, technology, engineering, and innovation value chain of the government and structurally do not support today’s needs in terms of Industry 4.0. To accomplish this, an independent, overarching structure should govern tech; one that is free of political interest. In Iran, the overall tech landscape (incubators, software parks, exports, boot camps) reports to a Vice President of Technology that reports directly to the premier. The ‘unity of command’ vis-a-vis tech has enabled Iran to move up 60 spots in the Global Innovation Index in the last five years. To this effect, the Special Technology Zones Authority, formed as an act of parliament in October 2021 under the Cabinet Division (board chaired by the Prime Minister) was set up and should act as the premier tech body of Pakistan to govern, enable and regulate all areas of tech.
9. Tech Trade with Neighbours and Superpowers: India’s 5G rollout prowess and IT and ITeS export revenue of $172 billion showcase their focus on the new world tech economy. Iran, despite sanctions, exports over six billion dollars of indigenous digital services and has their versions of Uber, Netflix, Coursera and foodpanda. Just Pardis Technology Park in Tehran is home to 250+ technology and knowledge-based companies in the fields of ICT, Biotechnology, Nanotechnology, Advanced Materials, Mechanical Engineering & Automation. Over 60% of Pakistan’s IT/ITeS exports are absorbed by the US and Canada, with very little tech trade with China and negligible with Iran and India. The same goes for African countries and others in Asia that can leverage services from Pakistan. The Pakistani commercial tech ecosystem should work with its Aerospace and Defence military partners to enable synergies between civilian and military tech capability for mutual benefit, an ecosystem approach and a common goal of tech enablement in the country.
Although all this is a lot to ponder, one message can and should be loud and clear. Today and in the future, we all are/will continue to be ‘citizens’ of tech through platforms and devices and as Sir Syed Ahmed Khan said: “Angrez ko us kay hathiyaar say maaro,” (beat the English with their own weapon); well, tech can be easily considered the new hathiyaar, and without it, there is no existence, success or growth of not just ‘Tech Pakistan’, but Pakistan. Pakistan Zindabad!!!
Javaid Iqbal is CEO, TransformX, a global consultancy in the digital customer transformation, disruption and innovation space. email@example.com
NB: His designation has recently been changed to Chief Commercial Officer at the Special Technology Zones Authority, Cabinet Division, Government of Pakistan.