The 2020 post-CoVid opportunity for Pakistan’s ICT industry

ICT has always had the potential to be a disruptor and game changer for Pakistan’s economy. Digital communication increases productivity in all verticals and reduces socio-economic transaction costs. The universal penetration of mobile telephony and continued growth of mobile broadband is proof that the public understands this value proposition. However, by and large, Pakistan’s ICT industry before the CoVid outbreak has not lived up to its potential for greater and disruptive economic impact beyond communication. On the business side, other than the largest Corporations, SMEs have been slow to integrate ICT into their operations. On the consumer side, growth in the e-commerce sector has lagged due to the lack of a reliable domestic payment gateway. By and large, digital services remain largely an experimental market in the hands of startups, with large domestic investment still waiting on the sidelines.

But the COVID outbreak could well be the trigger that leads to this sector permeating into all sectors of the economy as the public grapples with permanent life-changing societal impacts. The preference for social distancing is the new normal. There is widespread agreement that the easiest way the government as well as the private sector can address this is by integrating ICT into the service delivery process. This applies to all sectors and all transactions and the implications are huge.

There are two ways Pakistan can choose to address this need and opportunity. First is the developing world’s characteristic halfhearted approach by taking baby steps in the emulation of the developed world. This means the government does very little and leaves it mostly all up to the private sector. The private sector investment levels significantly lag global benchmarks and typically consist of imported solutions designed and priced for more affluent and literate societies. This means that even when they become available, these end up being used only in the elite segments and are mostly unaffordable and inaccessible to the masses for very long periods of time.

The second is the leadership approach where the government embraces this new normal and leverages its increased need for ICT. It develops an innovative and ambitious national vision around this paradigm shift that attract and facilitate large investments into our economy. It is a hybrid approach that incorporates the best elements of centralized planning and free-market enterprise. The Government has always been a key driver of ICT cities in the developed world. Silicon Valley would not have come into being without the government’s research and procurement contracts for both military and civil applications. Similarly, governments have played major roles in the economic growth of Shenzhen, Tel Aviv, Tallinn, Bangalore, Toronto, Melbourne, and emerged as a major factor in the growth of these cities as the world’s premier hubs that drive the global ICT industry.

For a country that is usually at the bottom third of nations, in terms of the services and the opportunity for advancement it provides its citizens, it is perplexing to see why it is so conservative in its developmental goals. The destiny of nations is set by visionaries who see opportunities where others see obstacles. It is their ambitious vision that draws the best and the brightest around them, which gives them the means to execute that vision. Pakistan’s vision around ICT has to date been uninspiring. It has not attracted the best and brightest who leave the country in droves every year. To stop this brain drain and to extract back our qualified ex-pats who can help take this industry to new heights, we need to set and pursue goals worthy of an ambitious nuclear-armed nation with one of the largest pool of working-age youth in the world. Our very own domestic one belt one road like initiative, that catches the world’s attention and the imaginations of its investors.

Creating an inspiring vision is not that difficult. You need to tap into many ex-pat Pakistanis who understand how to create and pitch such visions. Many Pakistani ex-pats have raised hundreds of millions of dollars from both venture capitalist and institutional investors and would love to share their expertise for the good of their motherland. This compelling vision does not need to be innovative. But it needs to be ambitious and show massive changes in cost and quality of service delivery which has disruptive implications to the economy. It is this disruption and the opportunity that it offers, that attracts investors.

For instance, a leading ICT vision must call for accelerated digital infrastructure adoption. Current broadband penetration in Pakistan is around 40% of its population and lags regional benchmarks. Back of the envelope calculations show that it will cost less than $100M to upgrade Pakistan’s entire communication infrastructure so that 3G/4G service can reach every household. But not every consumer can afford broadband so with business as usual, penetration will not reach 100% in a short time, even with that investment. Anticipating paradigm shifts in societal norms as a result of Covid’s requirement of social distancing, the option of ICT based distance learning and distance health made available to every one of Pakistan’s estimated 33 million household makes more sense than ever before. With the help of new associations like Ilm Association (www.ilmassociation.com) which has consolidated all the domestic major ed-tech players under one roof, the government can enter into private-public partnerships that result in providing constitutionally mandated services to each consumer at global quality standards and at a much lower cost than that of physical infrastructure. These partnerships setup large corporations that built up core expertise to research and tap the opportunities around service delivery to the household and individuals in every vertical. The byproduct of such projects is that Pakistan's broadband penetration profile starts to lead the world instead of lagging it. The infrastructure will allow it to think about creating single digital markets for commerce with other partner nations further elevating its digital profile with major benefits to its economy.

A massive drive with easy loans and incentives for the digital transformation of our retail, food, services, and agricultural economy by leveraging its advantages in productivity, mobility, customer access, transaction costs, logistics, security will provide for the second disruption in the economy. ICT can be used as the vehicle to deliver reforms to existing core economic sectors like Agriculture, Mining, and Construction.

The ICT vision can provide millions of jobs if coupled with a massive industrialization scheme that directs enterprise creation toward exiting local problems and opportunities of large size and use of technology conducive to local manufacturing and market skillsets. This builds on the recent trend of larger international investments in low tech enterprises like Bykea, Finja, Pak Vitae, Airlift, Cheetah.pk and others.

High tech enterprise creation that involves research and development around the industrial 4.0 technologies need to be linked to academia and specialized centers of excellence established in leading universities that make our tech entrepreneurs globally competitive. Expecting Incubator startups to crack these areas with academic heavy-lifting is not credible given Pakistan’s weak R&D profile. A good example of what needs to be emulated in all provinces is the recently announced Pak-Austria Fachhochschule in Haripur. In conjunction with three Austrian and five Chinese universities, it offers post-graduate centers of excellence in railway engineering, mining, agricultural sciences, Artificial Intelligence, and Nanotechnology.

Every such vision needs to address government services to its citizens (e-Gov). The nations that are leading the wave of digital governance and commitment to using digital technology to improve citizen lives have formed a collaboration network called Digital Nations. A goal to join this prestigious group would send a message to the world that Pakistan is serious about this endeavor. There are plenty of resources to draw from. In recent times the global model for digital government services is Estonia (e-Estonia). It leads Europe and offers consulting services to other countries that are interested in pushing this envelope.

All this is possible but this requires handing ICT planning to visionary marketers and technocrats rather than administrators and planners who manage growth conservatively and cautiously so as to not upset the status quo. In the case of Pakistan’s average citizen, the status quo is in many cases is a jhompri – 6% or even 9% growth GDP that trickles down to a slightly higher per capita income does not meet his aspirations.

In summary, COVID offers an unprecedented opportunity for formulating a vision that the world can admire and support with funding. This opportunity is there for the taking and an ambitious nation that wants to change its destiny would make this attempt, multiple times if necessary, rather than be content with the status quo. In the words of Einstein, “If you do what you always did, you’ll get what you always got”. God Bless Pakistan.