Current Pace and Type of Digitalization is Killing Pakistan’s Economy!

The term “Digitalization” was coined in Pakistan by telecom operators after they obtained 3G and 4G licenses back in 2014. After three years, there’s still major dispute on how digitalization is defined because every telecom operator has its own and different way of achieving digitalization in the country.

But if you ask me, the term is defined and mainly used to equip users with smartphones with always-on wireless broadband internet, i.e. mobile data.

This definition of Digitalization is in line with operator’s ultimate goal of selling more data bundles and hence the revenues.

Pakistani operators adopt different strategies to achieve their own type of Digitalization. For example they have introduced inexpensive data bundles, music streaming services, live TV apps, helping startups, delivering fancy speeches on digitalization and so on.

But apparently, all this is done to sell data bundles, more data bundles than ever.

The otherwise implication of Digitalization in Pakistan isn’t on par when compared with regional or global markets. For example we still carry cash to buy groceries, we pay tuition fee in banks while standing in queues, we call helplines to seek after-sale support (electricity, telecom companies, banks etc.), we still get doctor appointments on phone or medicine prescriptions on hard paper.

Then there are the large majority of Pakistanis who still pay utility bills in cash, book taxis while standing on roads, who don’t have bank accounts at all and so on.

This situation, while its getting better (reference: Careem, branchless banking), is way too slow, and if you allow me to be open with you: This slow digitalization will be do more harm than no digitalization at all.

While many may argue that we are getting there, digitalization is on our minds and that things are being done and it’s all good. I will respectfully disagree.

Sluggish digitalization is more harmful than no digitalization at all

The current pace and type of digitalization will hamper our national economy more. It has to be done right and quick in order to reap the results, or it will actually start killing us.

The best example is Careem/Uber.

While these are amazing services, and hundreds of thousands of people are getting benefits, the services are introduced in an ecosystem which is not fully digitalized. The outcome is thousands of families (of Taxi walas) without any income.

Our current (half baked) digitalization is not prepared to deal with equipping those old taxi drivers with alternate means to cope with the situation when they are left with no option but to sit back at home without any income at all.

Similarly, think of retail outlets of mobile phone companies, that top-up mobile accounts across the country. With branchless banking and online banking solutions now available, if adopted by masses to top up their mobile accounts through bank accounts or through mobile financial services, all such stores will go out of business.

We need to plan for such individuals who might go out of business due to our digitalization attempts. The only way is to equip them with even better and improvised ways of making their livings.

It’s similar to thinking about solving the impending automation scenario predicted by so many experts. Yes, humans will lose jobs but the increase in productivity should mean more meaningful work for everyone rather than putting them out of work completely. To achieve the optimum, we need to plan it rightly.

Another good example is Telecom sector itself.

Telecom companies, with not proper digitalized ecosystem, are going to lose revenues instead of increasing them. It won’t be entirely inappropriate to say that the very “digitalization” the telecom companies are spreading now is going to kill their businesses, if not done rightly.

If we look at current trends, the major use of internet — for masses — is Whatsapp, Facebook and YouTube.

Some of us use Careem/Uber, but number is not more than a million — out of total 40 million 3G, 4G users.

What this means is that a lot of people are consuming data services to use just the Whatsapp and Facebook. As a result, customers don’t use regular voice or SMS services. This effectively means that those inexpensive data bundles are also slashing the call and SMS revenues of mobile phone companies.

This indicates that unless data services are more important to customers, such as if data is used for more essential and life-critical tasks, then customers will not only pay premium for data services but will be more dependent on them as compared to using just Whatsapp or Facebooking.

Getting back to the point of half baked digitalization, if the entire ecosystem is planned better for rapid and quick digitalization, telecom companies could be actually selling more data to users with better than before ARPUs.

The Solution

Solution is a multi-layered national digital policy that should have everyone on-board. Government, private sector, telecom companies, banks, startups, retail sector and everyone else should working for a single agenda.

Everyone should work together to bring our daily tasks online. From banking to medical check-ups, from submitting our tax returns to paying challan fee, from selling our services/products to booking appointment with saloon, from buying cinema tickets to ordering our wedding invitation cards; from groceries to calling WAPDA guys; everything should be online.

If this happens, we will not only use the internet data more effectively, but this will actually help our economy grow multiple folds. This is what we should aim for and this is what we need to do right away.

Just for a comparison, China did exactly this in becoming what it has become today. It digitalized its economy, streamlined the processes and then let everyone produce something (from their homes) and sell them to global markets. As a result, they have trillions of dollars in exports and every single individual is contributing towards national economy.

Good thing is that we don’t have to invent anything. This entire model has been perfected by many countries, both in east and west. We just need to replicate the model while incorporating our local needs and get it up and running within no time.

But then, we have to do this in a very correct manner. I propose that domain experts — from government, private, academia, industry, and everywhere else — sit together to chalk out a fail-proof plan.

But we need to do it right away.

Tech and telecom reporter for over 15 years

  • I would say that the approach of transition towards digitalization is better than sudden jump towards it. A big leap would be more disruptive and volatile. The best way forward is to let the digitalization evolve naturally rather than rush hastily towards it.

    • While I agree that adaption would be natural and slow, however, preparing the ecosystem shouldn’t be delayed on purpose.

      I would also want share with you that right after the auction of 3G and 4G, I asked Minister about payment gateway and she promised that it would be deployed with-in few months. She had said that Ministry of Commerce and MoIT were working on it. This was one vital thing that we are still missing.

      Speaking frankly, we don’t have a framework in place, without which the digitalization is direction-less. Sitting together and coming up with a good plan is not a bad idea at all, I would say.

      • Yes, on this I totally I agree with you. Government should facilitate the movement towards digital Pakistan and create ecosystem for this.

      • You are wrong, non-survivability of existing sector due to disruptive technology is captilist/open market problem, so should be its solution.

        For almost 3 quarter of century Taxi walas roamed in Pakistan with no regard to price per distance traveled, last time I took a ride in taxi with price/KM was more than quarter century ago (Morris taxi), right now existing taxi don’t conform to any laws of land and charge whatever they feel like charging go like mad, disregard all the traffic rules, yet now much better cabs who charge by the distance covered have made old one redundant.

        Those who can’t change with technology of time, they should peruse some other trade, there is example of it, there used to be large number of cobblers in most villages of District Chakwal, after the advent of Industrial scale shoe manufacturing, they could not survive and eventually artisan died and so did that their trade, while next generation of cobblers plied themselves in other trades and today they are better for it, so will happen to these old taxis and taxi wallas, either they keep up with new trends, buy newer vehicles, ply themselves on predetermined rules of Uber/Careem or pursue something else.

        Survival of the fittest.

  • Ever heard about Digital revolution? No one asked Steve Jobs to introduce iPhone back in 2007 and at that time companies selling cellphones with buttons were effected but ultimately they worked hard and learned how to compete and be in market. Same case with Elon Musk’s Tesla. When he introduced electric cars, people made fun of him but after many years all the companies are trying to make electric cars as it is the future. Point is someone has to sand up and set a trend and other should follow him to make real progress. And lastly I know a couple taxi drivers who drove 1985 Model Fx but now they are driving Careem and are happy with it…

  • Sensationalist headline, nothing is killing Pakistan economy least of it is lack of digitization, while a totally new sector of on demand cabs has come up purely with the help of private entrepreneurship, that’s total revamp of archaic sector within first 2 to 3 years 3G/4G launch, who knows what will happen within next 5 years.

    Indian Govt tried so hard to establish the hardware industry in 80’s, yet no one of any authority realized the worth of software industry whose roots were in IT institutes in Bangalore in 80’s which cropped up without any Govt involvement. Sometimes lack of Govt involvement is the best thing that can happen to a particular sector.

    Survival of the fittest, private entrepreneurship is the best policy, let the market take care of itself, if something is not fit enough to survive its better to let it go with dignity and peace, rather than propping it up (with subsidies), we should be hopeful of the future and what it brings to Pakistan.

  • The writer automatically assumes that every Pakistani is literate or has a bank account with a credit/debit card which is required for all the above mentioned benefits of ‘digitalization’. How can i charge my phone online if i don’t hv banking services. N no one is asking taxi walas to sit in their homes. They can sign up for uber and drive. If they can’t. Thats because they don’t know how to use a smartphone or don’t understand how it all works. The issues are more basic. Education and financial services. Our banking sector is one of the worst and most user unfriendly in the whole world.

  • The only problem is we have lack of think tanks in all sectors. We want to adopt modern tech but don’t have any study on its impact in near or far future.

  • spread the Digitalization for all of 11 people of purestan who can write their Full names in English, yeah of course…. Instead make access to good standard education for all masses the priority first then all these side projects will come to good effect on their own.

    • Bhai Jaan; that’s got to be most irrelevant response that one can post to this article…….

      In early 90’s Datsun 1000 and Morris minors were the taxis of the time, Nawaz Sharif’s first Govt tried to revamp that sector & launched yellow cab scheme, most of the vehicles were imported duty free as CKD kits, that cost 1 Billion US$ of in 1993 to 1994 to national exchequer, right now those taxis of 90’s are being replaced by private investors and entrepreneurship out of their own pockets.

      As there are only 11 people who can write their names in English in Purestan, by your logic people are not qualified to earn extra or use better service, as they can’t read, write or speak a word of English, but they are able to do these things due to new age technologies, that’s disruption that new tech brings.

      Think before posting such nonsense.

      • The problem in Pakistan has always been high taxation on motor vehicles. While in other countries driving cars is expensive not buying them, as they have high car ownership tax and some countries like China a license plate is sometimes more expensive than car itself. This high taxation on car prices has totally destroyed Pakistani auto sector and thus people are forced to buy unsafe and uneconomical models at top prices.

  • I think government should integrate the digital education of local taxi walaas with Yellow cab scheme or rozgaar scheme, otherwise they will be left out.

    • But should also impose a fare system though. Now people don’t want to argue about fares. I didn’t use taxis since march.

    • Bhai do you even know in China even rairi wala uses Mobile payments. The reason is no transaction charges which won’t be going anywhere soon from Pakistani banking cartel thanks to ishaq dollar

  • Telecom is not giving the required speed or connection quality as promised, how can corporate world or SMEs or Entrepreneurs dare to go all digitized. There is a facebook page to every business right, but they dont rely on their online business much.
    Second, digitalization will have to be properly ‘managed’ and ‘secured’. Cyber Security is not upto the standard in Pakistan. Just this year, on Independence Day tens of Pakistani Government official websites were hacked by the Indians.
    All the stakeholders need to sit and actually start working a safe and secure, well managed digitalized Pakistan.

  • Before seeking digital age, we must demand privacy laws accompanied by strict application and proper and impermeable protective framework in place. And eventually, we should strive for a cash less economy as well.
    It hurts to see that even dept. like PITB, with all its fanfare, are guilty of leaking citizen data without remorse. In such an environment, the lesser the digital life the better. We must realize that privacy leak has an incompensable price – and those who pay it, pay dearly. Yes, equifax leaked data, but then there is a massive campaign to sue, prosecute, punish and banish them. Will serve as a lesson for the rest.
    At least in urban areas, everyone has a bank account accompanied by a debit card and internet banking account. Privacy and trust are the biggest issues that must be resolved before everything else. For instance, Uber had to introduce cash payments because it was not easy to convince customers to pay via cards.

  • Proponents of digitalization forget to mention something very important. It shall save time for everybody. Individuals save time and thus be more productive in a day. Companies save man hours and get happier, facilitated, innovative and productive work force. The benefit will be more pronounced in their bottom line and quarter to quarter results because they will save money by saving time.
    Traveling by vehicles is no less perilous than that by foot or on horses/carts etc. The distinguishing feature is savings on time and that single benefit trumps all.

    • I agree with you but time saving benefit can only be achieved by those who use technology with that intent and purpose. Otherwise most of us generally tend to waste more time with the use of technology than saving time like overuse of social media, playing e-games, redundant messaging on whatsapp and above all staring at mobile screens thousand times a day with no purpose in mind. :)

  • I’m afraid the article misses the mark. Term digitalisation wasn’t coined in Pakistan after 3G/4G but this is an international phenomenon. More so for advanced countries with shurnk telco margins amd with an e- governance system in place much better than Pakistan.

    Also the example of uber/careem claims not enough people are using it so it’s harmful but the next example of masses using branchless banking is also claims it’s harmful.

    Furthermore if all services are digitalised on national level there’s still a chunk that’s at loss. With everything going digital, illeterate people will end up paying someone to fill forms online and would have to trust others (sometimes crooks) to handle their money for online payments. Remember how pirated windows 98 would be installed for pkr 3,000 for people who had no idea how to install it themselves?

    Digitalisation is not about e- Governance only but fitstly and primarily about educating getting people to use technology.
    And social networking apps are a good place to start.

    Taxi drivers losing out is a matter of them overcharging. Their fates would go up with fuel price hike but would never come down with a decarease in fuel price. True for entire country. So what happened is not half baked digitalisation, but technology. Texhnology ALWAYS makes things affordable. Simple rule of thumb. Also comparison of 40 million internet users and
    1 mil uber careem users is not correct. Out of these 40 million, many have their cars, many are kids and many don’t have uber/ careem available in their areas, so there’s a mismatch.

    Thing is no one cracked the puzzle yet. But the closest guess is spread use cases before making it part of their lives.

  • Author Quote:
    China did exactly this in becoming what it has become today.

    China don’t put overburden taxes on telecom. e.g. unthinkable massive 12.5% WHT

    This Bhata tax is making the life of ~90% poor telecom users miserable with no hope of refund.
    and this is just one example…

    anther example… look at your WAPDA bill, and you’ll see number of questionable taxes.
    with such irrelevant taxes, high price of electricity and long outage hours, we can’t progress and compete with other nations.
    and that’s why our Industries are folding up, and our exports are declining rapidly.

    I can write more, but warping it up with one or two lines…

    China’s Govt is sincere to it’s nation, while ours have only one agenda “Loot and Runaway”
    That’s why despite one of high populated country in the world, we’re on bottom line in terms of economy :(

  • Get Alerts

    Follow ProPakistani to get latest news and updates.

    ProPakistani Community

    Join the groups below to get latest news and updates.