By Ms. Anoshka Johum, Research Associate, Center for Global & Strategic Studies (CGSS), Islamabad
Digital transformation has become a prerequisite for the development of a state, having multifaceted impacts on human society. With the rapid developments in the field of science and technology along with increased digitalization across the globe, the traditional sphere of various sectors in Pakistan such as economy, governance, market-customer relations, healthcare, education and even security has largely transformed.
The Information Technology (IT) has become a fundamental part of industrial and manufacturing
sectors in Pakistan. Advanced technologies such as Internet of Things, robotics, cloud computing, big data, artificial intelligence (AI), automation, mobility and many others have a significant impact on nearly all walks of life. The digital medium is considered cost-effective with a wider reach which comes with many benefits for the people around the globe and has an easy access to information anytime and anywhere.
Economic Sector of Pakistan
The process of digitization is also having significant impacts on the economic development in Pakistan by making progressive grounds for the economy to grow more effectively and by promoting innovations in the business environment. Now most of our economy is shifted from a physical management system to a more sophisticated and software-controlled economy. Information technology has now become the fundamental part of our industrial and manufacturing sectors. These technologies have not only increased productivity and efficiency by providing higher flexibility and diversity but also provided ample opportunities for Pakistan to have better strategic and diplomatic outlook in the international arena. Technological advancement has transformed business models, production process and the way of working and collaboration among various stakeholders and parties involved. It has also enabled different sectors in Pakistan to have greater mobility, faster decision-making and delivery, and support higher standardization, customization and prosperity.
This in return could alleviate poverty by creating new jobs for the fresh graduates and young entrepreneurs of the country. The Digital Pakistan Initiative has created hope that the government is making serious efforts to promote digital technology in the country. However, Pakistan needs to organize and enhance the skills, expertise and knowledge for digital transformation in all walks of life.
Pakistan is considered amongst one of the major emerging global economies and digitalization can provide ample opportunities to pave the way for
economic development. Despite faring low on digital participation metrics, Pakistan has made great progress on achieving social equality and transforming the underperforming industries. The ICT sector of Pakistan, especially, has been actively supporting the country in its pursuit of digitalization with a plethora of innovative initiatives to empower citizens and industries. But our governance still has a lot of room for improvement as we continue to face longstanding social and economic challenges.
Digital Finance Services is another important aspect related to the digitalization in Pakistan. Since almost 95% of the internet users access internet through mobile devices, this provides an opportunity for the digital finance services which has already seen a 751% growth in mobile wallet accounts in the last five years. A McKinsey Global Institute report estimates that the digital finance potential of Pakistan could be $36 Billion by 2025, providing a 7% boost to the GDP, creating 4 million new jobs and resulting in $263 Billion new deposits.
E-Commerce and Telecom sector of Pakistan
The government in Pakistan has taken many initiatives to upgrade digital banking infrastructure and ease the conditions and exhausting paperwork for
digital services such as e-payments, online transactions and the issuance of credit cards, and their use in online stores or in-store shopping, at petrol pumps, online utility bill payments and university fee payment etc. Therefore, a large number of companies in Pakistan have flourished through a digital approach by providing customers with effective solutions to their problems by innovative marketing strategies.
According to the telecom indicators of Pakistan issued by the Pakistan Telecommunication Authority, the country has over 165 million mobile subscribers, 70 million active internet users and 60 million Smartphone users. In an increasingly digital world, there remains little doubt that connecting people to the world can open new possibilities and bridge the gaps of inequality, both social and economic. As the internet penetration has gone up to 70 percent in the country, countless case studies emerge that people successfully achieving their ambitions and turning their dreams into a reality. The digitization and technology hold the promise of progress and prosperity for almost every country including Pakistan. Likewise, the digital means of marketing and communication are also considered quicker, result driven and adaptable.
Technology is not only connecting and facilitating us, it has become the cornerstone of social empowerment on a global scale and is delivering amazing solutions to longstanding social challenges. While daily life has become faster and more informed, governments too are becoming agile and more efficient.
The technological advancement holds tremendous potential for the overall progress and development of the state. Despite having number of issues and challenges while digitally transforming Pakistan yet the country has the potential to overcome these challenges and reap the benefits associated with it. By utilizing these emerging technologies such as Artificial Intelligence, Blockchain, and Cloud, the government in Pakistan can reinvigorate public services while contributing to the global digital economy that is growing rapidly. Pakistan is in need to put more efforts to implement innovative ways to ensure transparency in governance while seamlessly promoting efficient work and living environment for its citizens.
Over the last few years, internet traffic in Pakistan has surged to over 83 million internet users. With over 97% of Pakistanis accessing the internet through their cellphone, this rapid expansion can be attributed to the dissemination of 3G/4G services by significant telecom players in Pakistan. Having widespread access to the internet, numbers on social media platforms and e-commerce platforms have multiplied. The surge in internet traffic has led to a drastic increase in cybercrimes such as phishing, harassment, digital identity theft and other cybercrimes that are associated with social media, financial systems and grey trafficking (use of illegal telephone exchanges to make international calls bypassing the legal routes).
Unequal access to the internet is a multifaceted issue in Pakistan and there are number of reasons contributing to this issue such as infrastructure gaps, the rural and urban divide, and economic inequality in Pakistan. Many impoverished regions and remote areas in Pakistan do not have access and basic infrastructure for the internet usage that has made the process of digitalization very complicated and difficult.
According to the Inclusive Internet Index 2020, Pakistan ranked 76th out of 100 countries in internet accessibility. Internet access in Pakistan stands at
around 35 percent, with 78 million broadband and 76 million mobile internet connections. Around 35 percent of Pakistan lacks internet infrastructure, which means a complete transformation is not very much possible until and unless the infrastructural development for the provision of internet has not been done properly.
Digital Pakistan Amid COVID-19 Era
COVID-19 pandemic has forced many states around the globe to fully adopt a true digital lifestyle. The benefits of technology that has been witnessed during the outbreak has never been experienced before. According to a report by Accenture, the pandemic accelerated digital adoption by almost five years. Furthermore, it is expected that the approximately 60% of the global GDP will be digitized by the year 2022 and E-commerce sales are expected to increase by 40% reaching approximately $4.9 trillion by the year 2021. Pakistan seems to follow the same trajectory while highlighting the prospects of the digital world.
Digital transformation is casting a major impact on smart and efficient governance and by embracing digital technologies such as Cloud Computing, Artificial Intelligence (AI), and Blockchain, governments are functioning more effectively and are making life easier and happier for their citizens. However, Pakistan is in need of a digital transformation to have an integrated approach and coordination of all departments to achieve the desired results. For better governance, the government in Pakistan can develop better technologies to address various challenges to the country.