FeaturedNationalVOLUME 17 ISSUE # 40

Moving towards the digital economy

Digitisation of the economy is the name of the game now. Digitisation drives entrepreneurial innovation, inclusive economic growth and productivity. Apart from information and communication technologies, it fills many gaps in the education and training sectors.

Digitisation is regarded as the fourth industrial revolution. But in the digital race Pakistan is not at a par with other countries. We lack the basic wherewithal to make the fullest use of digitisation.

According to the World Bank 5G readiness plan, the government of Pakistan needs to devise a strategy to attract multinational organizations to invest in a digital transformation infrastructure. In recent years Foreign Direct Investment in the telecommunication sector has dropped from US$763 million in the FY 2019-20 to US$202 in the FY 2020-1.

The Mobile Economy Asia Pacific Report 2021 projected, “Pakistan will be at the lowest end in terms of smartphone users as well the 5G coverage among the selected countries of Asia Pacific region by 2025.” According to the GSMA estimate, the economic contribution of the mobile industry in Pakistan might reach $24 billion by 2023, accounting for 6.6 per cent of the country’s gross domestic product.

Pakistan’s technology sector has grown rapidly in recent years. We produce over 20,000 Information Technology (IT) graduates each year. According to a survey, Pakistan has the fourth highest earning IT workforce in the world. Pakistan’s annual revenue from exports of IT services totalled $1.4 billion in 2020. It is also notable that Pakistan’s online population has grown rapidly at 68 percent per annum from 2016 to 2019, and the Internet penetration rate reached 45 percent by December 2021.

The Global Competitiveness Index 2019 ranked Pakistan 73rd out of 141 countries on the ability of the active working population to possess and use digital skills. It goes without saying that digital transformation is important to boost its economic recovery drive and enhance the long-term resilience of businesses in adapting to future shocks.

There are significant economic benefits attached to accelerating Pakistan’s digital transformation. A special study commissioned by Google found that digital technologies can substantially add to annual economic value in Pakistan. The key findings of the research study show that if the latent potential is fully utilised in the coming years, digital technologies could create up to Rs9.7 trillion ($59.7 billion) in economic benefits. This is equivalent to about 19 percent of the country’s current GDP. The sectors poised to be the biggest beneficiaries of the projected digital revolution are agriculture and food; consumer, retail and hospitality and education and training. Machine learning algorithms have shown to be beneficial for the agricultural and food sector, whereas AI-powered technologies can monitor ecological conditions to determine whether crops need irrigation or not, reducing water use.

But this is easier said than done. A coordinated series of measures need to be taken to fully capture Pakistan’s digital opportunities. First of all, we need to develop an appropriate infrastructure to support the local tech ecosystem. Secondly, we have to create a conducive environment for IT exports and promote innovation and digital skills.

It is gratifying to note that the Pakistani government has already taken a number of steps to accelerate digital transformation such as the “Right of Way” policy, which expedites the expansion of telecom infrastructure, and the “Brand Pakistan” campaign, which promotes the country’s exports via digital platforms.

These are welcome steps but more needs to be done such as increasing Internet availability through infrastructure investments, especially in rural areas and creating an accommodative tax framework and easing restrictive data policies, and forging close public-private partnerships to improve the relevance of skills training.

In this context it is relevant to point out here that Google is also playing a helpful role through its programmes and products in facilitating Pakistan’s digital transformation journey which will benefit businesses, consumers and society as a whole. Google has been instrumental in advancing the country’s digital transformation by investing in programmes, people and partnerships to support the “Digital Pakistan Policy”. These range from digital skilling for MSMEs, to training Pakistanis in emerging technologies like machine learning. Google also indirectly supports the creation of more than 410,000 jobs in Pakistan. These jobs are created through the use of Google products that lead to businesses expanding their customer bases and increasing revenue.

On its part the government has identified the creation of a holistic digital ecosystem – most prominently in its “Digital Pakistan Policy” – as one of the key levers of economic growth. Despite these significant achievements, the country has to go further in its digital transformation drive.