Geographies in Depth

Pakistan’s digital revolution is happening faster than you think

Lahore Ring Road, Lahore, Pakistan

Growth is being accelerated by major investments in digital infrastructure. Image: Talhah Sayeed/Unsplash

Ayla Majid
Founder and Chief Executive Officer, Planetive
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Pakistan

The digital power of China’s Belt & Road Initiative (BRI) is slowly unfolding and shaping into a whole new area of opportunity.

When the BRI took global centre stage in 2013, most conversations revolved around traditional infrastructure: building roads, railways, power sources and linking borders. However, the digital awakening that BRI brings, and the associated development of human capital and innovation, is much more powerful.

The global map is being altered at a much faster rate than anticipated due to the disruption created by digital infrastructure, artificial intelligence, the Internet of Things, and blockchain. Further digital and technological disruption is now set to mend fractures in society – leading to improved living conditions and enhanced economic empowerment.

This disruption has given new life to e-commerce and the start-up scene in BRI countries. In light of the Global Competitiveness Index 4.0, it is extremely important that economies grow in all areas, overcoming challenges and making investment in human capital and innovation. Resilience and agility are key.

Looking at the South Asian region, some of the traditional deterrents to growth have been inadequate transport facilities, patchy power supplies and lack of financial inclusion. As we have seen in the past, industrial revolutions take their time to reach developing countries but the Fourth Industrial Revolution has been quick to reach all corners of the world.

Billions of dollars of investment are bridging the infrastructure and power supply gap while improving technology – the goal is to look past the problems that have hindered the road to progress in countries along the BRI.

The flagship project of the BRI, the China-Pakistan Economic Corridor (CPEC), which is a major collaboration between China and Pakistan, has been rapidly progressing and the impact of the project can be seen in the lives of Pakistani people, as reflected in an improving human development index.

Pakistan, which is emerging from many years of the war on terror, is now on a decent path to progress, with economic growth of 5.8% and improved investor confidence. At the World Economic Forum in 2017, Ebay’s chief executive, Devin Wenig, highlighted Pakistan as one of the fastest growing e-commerce markets in the world. In 2018, Alibaba bought Pakistan’s largest e-commerce platform, Daraz.pk.

Growth is being accelerated by other major investments in power and connectivity infrastructure, technology and digital infrastructure. Ant Financial Services, China’s biggest online payment service provider, recently bought a 45% stake in Telenor Microfinance Bank, in a deal that valued the Pakistani bank at $410 million.

Irfan Wahab, chief executive of Telenor Pakistan, called the deal a “game changer”; while Eric Jing, chief executive of Ant Financial, said it would provide “inclusive financial services in a transparent, safe, low-cost and efficient way to a largely unbanked and underbanked population in Pakistan”.

This kind of investment will benefit from the significant demographic dividend in Pakistan, targeting the largely unbanked young population, and providing not only financial inclusion but also a base on which to build digital businesses.

What the country needs now is to improve its position on the innovation and financial inclusion indices, currently at 89 and 75 respectively, on the World Economic Forum’s Competitiveness Index 2018.

Image: World Economic Forum

CPEC is creating the atmosphere for investments like this, which improve connectivity with infrastructure and digital advances. The prospects for getting more benefits out of the project have improved further with the change of government in Pakistan. By providing more transparency in CPEC deals, the government of Pakistan is ensuring a safe investment that will not lead the country into danger.

It has been observed that populations in countries with large digital and technological divides are fast adopters of technology. China is at the forefront of developing future technologies – artificial intelligence, robotics, cyber and space technologies – making it a promising partner for countries along the BRI.

This demonstrates the opportunity presented by the Fourth Industrial Revolution, which can uplift people by merging the physical, digital and biological worlds to create a better quality of life and "harnessing and converging technologies in order to create an inclusive, human-centred future".

The underlying concern for stakeholders in Pakistan and the rest of the region is to improve skills and create a future-ready workforce with an understanding of digital media and knowledge about entrepreneurship.

The rapid completion of CPEC projects and the use of digital technology in the process is disrupting the economy and the lives of people at the same time. The question is whether Pakistan’s leadership will choose to embrace these technologies and take advantage of the biggest project on the road to progress. The future is full of opportunities and promise.

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