Despite issues and challenges and relatively slow development, GSMA foresees a promising role of the mobile industry in Pakistan with its contribution to the national economy expected to increase to $24 billion by 2023.
“By 2023, the economic contribution of the mobile industry in Pakistan will reach $24 billion, accounting for 6.6% of GDP, GSMA stated in its report “Pakistan: progressing towards a fully-fledged digital economy.”
Digital economies are multi-faceted constructs: high-speed internet access, digital identity frameworks, and multi-sided platforms provide the foundations for effective digital citizenship, rich digital lifestyles, and global digital commerce.
In 2018, the mobile ecosystem in Pakistan, directly and indirectly, employed 450,000 people. It contributed $2.2 billion to public sector revenue.
Mobile is at the center of Pakistan’s national development plan and its progression along the digital society path, helping to close connectivity gaps, increase financial inclusion and sustainably transform verticals as part of the Fourth Industrial Revolution.
The importance of the mobile sector to Pakistan is significant and growing. It is a vital contributor to the economy and is redefining the way individuals, businesses, and state bodies function and interact. With decelerating GDP growth compounded by a rising population, the jobs, taxes, and productivity gains generated by the digital ecosystem will be pivotal to supporting the health of Pakistan’s economy and society moving forward.
The majority of this uplift will be driven by improved productivity and efficiency, particularly from the increased take-up of mobile internet services. Wider network coverage and the rapid adoption of new 4G services could further accelerate growth and, subsequently, the industry’s contribution to the economy.
With 3G having peaked, 4G is set to take the lead in Pakistan in 2022, reaching 129 million connections by 2025, a GSMA report commented. The conservative pace of 4G adoption in recent years suggests intervention is needed to disrupt market dynamics.
Pakistan’s mobile industry is also a key partner for the government in its efforts to realize the UN’s Sustainable Development Goals (SDGs) and meet socioeconomic targets under the Pakistan Vision 2025 and the Digital Pakistan policy.
GSMA’s Recommendations
To achieve digital ambitions and unleash the potential of the mobile economy, the foremost role of the government must be to broaden access to high-quality mobile broadband networks, affordable services, and smartphones.
Fair and predictable regimes for spectrum licensing and tax is central to this, serving as the catalyst to unlock the huge growth potential, investment, and societal benefits associated with a better connected, modern Pakistan that ensures no one is left behind.
Regulatory reforms in isolation will not be enough. Government agencies at all levels must cooperate internally and with private firms to instigate a shift in mindset and establish a clear direction for accomplishing the Digital Pakistan vision. This will involve the development of robust policies that strengthen institutional frameworks, raise literacy rates, address inequalities, permit and protect cross-border data flows, and engender an innovation culture.
With well-communicated messaging, together these will create a trusted environment in which citizens, tech start-ups, and enterprises can flourish, jump-starting Pakistan’s evolution into an advanced online economy and a digital powerhouse in South Asia.
Mobile will be at the core of Pakistan’s industrial development and the wider evolution to a knowledge-based economy characterized by an openness to trade, a fair tax regime, and a supportive business environment. The outlook shows clear potential, but authorities must together lead the necessary action to realize key societal, economic, and digital ambitions.
National and provincial policymakers and the Pakistan Telecommunication Authority (PTA) are playing a vital role in increasing access to high-quality connectivity and digital services, as well as cultivating inclusion, e-commerce, and entrepreneurial spirit.
Mobile is the dominant form of digital connectivity in Pakistan, with 89 million unique subscribers as of the end of 2019. Some 67% of those who have accessed the internet has only ever done so using a mobile phone. That said, Pakistan exhibits a relatively large ‘usage gap’; 54% of the population is covered by a 3G/4G network but do not subscribe to mobile internet services.
Access to connectivity and affordable devices are two factors behind this. However, increasing the availability of relevant local language content, ensuring privacy and security, addressing gender imbalance issues and improving digital literacy rates will also be critical in reducing the current differential and accelerating the digital economy
The Pakistan economy grew at an average rate of over 5% between 2014 and 2018 on robust private consumption, improving agricultural productivity and rising investment (especially in energy and infrastructure projects around the China-Pakistan Economic Corridor). The same period also witnessed a fall in foreign direct investment (FDI) in the country’s telecoms sector, including a deficit of more than $90 million in FY 2016/2017.
Nevertheless, aggregate inflows have grown in recent years, with Airlift, Bykea, Careem, Daraz, Rozee, and Zameen all securing multi-million dollar investments. Access to venture-capital funding, alongside reliable and affordable connectivity, digital payments, talent, and consumer trust, is consistently cited as a prerequisite to a thriving internet economy.
The mobile ecosystem (and particularly operators) therefore play an increasingly important role in GDP growth, job creation, tax generation, and driving productivity gains across primary sectors such as agriculture and manufacturing. According to the International Telecommunication Union (ITU), a 10% increase in mobile broadband penetration in the Asia Pacific leads to a 1.5% rise in GDP.
