The dawn of 2020 was followed by a crisis the world was not prepared to deal with. Few had anticipated the magnitude of COVID-19, fewer still were equipped to contain it. Despite the tough times, dealing with hardship results in an abundance of lessons learned – usually paving the way for a brighter future.
One of the most critical lessons Pakistan has learnt from the current pandemic is that a lack of digitisation has been a major obstacle in its path towards relief efforts in particular, and macroeconomic stabilisation in general.
A state derives its prime power from its tax base. Though Pakistan has a meagre tax revenue of $15.8 billion to support a population of 221 million, every incremental addition into the tax net would directly contribute to annual growth rates positively. Formally unbanked population in Pakistan stands at 84%, which gives us an estimate of the sheer size of our shadow economy. This should be taken as a silver lining, rather than a setback. Successful digitisation of Pakistan’s informal sector through modern digital banking would significantly enlarge the pool of taxpayers in Pakistan.
On the other side of the equation, digitisation would not only help broaden the tax base, but also make G2P payments more transparent and efficient. Studies show there is a direct relationship between financial marginalisation and poverty. Despite massive resources dedicated to Ehsaas Program, the biggest challenge has been to identify those truly in need of government help. Therefore, Prime Minister’s policy statement on the program stresses on “promoting financial inclusion and access to digital services.” Dr. Sania Nishtar, leading the Ehsaas Program, admitted that administrative and financial digitisation would help the government access vulnerable sections of the society.
The current lockdown has made evident that cash is not only an outdated, but a dangerous concept as well. People are lining up to pay their utility bills, tuition fees, at bank branches and collecting remittances at money exchange outlets despite instructions to stay at home. Due to inaccessibility of traditional banks for the poor, fintechs/neobanks might prove to be game changers. It is important for the banks to come to people if people cannot go to the banks. With a pool of more than 76 million smartphone users, inception of an era of digital banking in Pakistan would turn the tables on poverty. PM Imran Khan’s Digital Pakistan Policy has correctly emphasised the need to “develop a framework to allow e-banking activities in order to maximize the usage of mobile financial services”.
The current fight against COVID-19 has also revealed all the reasons why the country needs a centralized healthcare apparatus. To avoid re-testing patients amid a severe shortage of testing kits, a consolidated framework in the form of an app or a digital portal to track a patient’s history would help health officials examine the progress. This would also enable doctors in cities to remotely attend patients in rural areas and assist local paramedic staff. Digitization in health sector via the use of telemedicines, hospital automation and national health database would enhance the speed and efficiency of correspondence, thereby saving lives.
“Education is the passport to the future, for tomorrow belongs to those who prepare for it today”, Malcolm X. While safety measures may allow for nearly everything to be put on hold, education must not be hampered. Academic loss in the current lockdown has been significant. It is time to digitize our academia – educational institutes should begin to impart e-education. With 22.8 million out-of-school children, digitization is the most convenient and effective way to educate Pakistan’s rural population of a whopping 144 million. Young population in any country is the primary engine of economic growth. In Pakistan, 64% of the population is below the age of 30 and 29% between the ages of 15 and 29 years. If we can provide internet access to such a large rural youth, a higher literacy rate would be an obvious result. HEC has a tremendous responsibility in this area. It needs to join hands with technology companies to develop sophisticated academic softwares that help students attend classes, give exams, submit assignments et cetera all through digital means.
Even though COVID-19 is projected to halt growth rate for FY2020 to 2.6%, the state of affairs cannot be taken as a given that cannot be changed – survival is not resilience. The current pandemic may have jolted the economy, but it shall reinforce the resolve to digitize Pakistan. It is imperative for us to comprehend the nature of modern times, and hence recognize digitization as an immediate need for Pakistan. The scope and depth of digitization would determine how the economy would transform in the future. Considering the enormity of the task that lies ahead, the government should outsource part of the cause, and invite foreign businesses and investments.
In the face of temporary economic hiccups, Pakistan nevertheless has ample reasons why the country’s trajectory would be upward. A large consumer market makes it lucrative for Foreign Direct Investment (FDI). Steady, though low, growth rates are providing assurances to the International Financial Institutions, providing Pakistan with much-needed access to international credit market. Pakistan’s rising freelance industry is already causing disruptions in developed economies by offering cheaper skilled labour on-demand. Vast working population has the potential to make Pakistan a global factory not very far in future. Despite the apparent odds, future looks bright for Pakistan.
SadaPay is registered in Pakistan as SadaTech Pakistan Pvt Ltd with the Securities and Exchange Commission of Pakistan (No. 0136598), and is a wholly owned subsidiary of SadaPay Technologies Ltd., registered in Dubai International Financial Center under commercial fintech license #3263
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