Why is information technology important for Pakistan to overcome its economic challenges?

By Umair Azam, Founder and CEO, Integration Xperts.

There is no split of opinion about the current economic situation of the country. It is in a dire state. However, as a nation, we must find ways to contribute our part to helping the derailing economy get back on track. In my opinion, information technology (IT) holds the key for Pakistan to overcome its economic challenges. The benefits of IT that can make it possible are as follows:

Job Creation: The IT industry has the ability to provide a large number of high-quality employments. The sector employs over 600,000 people [i] and has enormous potential to create thousands of more jobs for adequately skilled graduates to reach the export target of 15 billion dollars in the next three years [ii]. This can help alleviate the country's unemployment issues while also providing opportunities for the country's rising young population.

Economic Growth and Productivity: IT is critical to generating economic growth and increasing productivity. According to the World Bank, a 10% increase in broadband penetration might result in a 1.38% boost in GDP [iii]. A significant increase in broadband penetration over the last few years has increased the GDP contribution from the IT sector. The Ministry of IT and Telecom estimated that it could go to 13 percent by 2025 [iv]. Furthermore, implementing IT solutions can boost productivity across other industries, increasing their contribution to the GDP as well.

Foreign Exchange Earnings: In terms of exports, Pakistan's IT sector has demonstrated promising development. IT exports from Pakistan in FY 2022 stood at USD 2.6 billion. The government has recently emphasised increasing information technology exports from 2.6 billion dollars annually to 15 billion dollars in the next three years. [v] [vi]

Innovation and Entrepreneurship: The Global Innovation Index 2022 ranks Pakistan as a prominent climber among the countries for innovation in business sophistication, knowledge, and technology outputs. The report also notes that Pakistan has steadily gained position over time, which indicates the country's potential for fostering innovation and entrepreneurship in the IT sector. [vii]

Digital Transformation: Embracing digital transformation can have a significant impact on various sectors in Pakistan. For instance, the use of mobile health applications can improve healthcare access and outcomes, while digital payment solutions can enhance financial inclusion. Easy access to digital payment can also help the ever-growing freelancer community in Pakistan earn more foreign exchange for the country.

Our policymakers should take concrete steps to help make the current environment more conducive for the IT industry.

My few recommendations in this regard are:

1. Establish initiatives & partnerships between academia and industry to promote IT education and skills development programs. Focus on relevant courses, vocational training, and certification programs to meet industry demands.
2. Invest in improving digital infrastructure, including broadband connectivity, to expand access to reliable and affordable internet services. Support digital literacy programs and incentivize the adoption of digital technologies among businesses to enhance productivity.
3. Create a favourable environment for IT exports by offering tax incentives, promoting ease of doing business, and establishing dedicated IT export zones. Strengthen trade partnerships and attract foreign investment in the IT sector to further boost exports and foreign exchange earnings.
4. Establish startup incubators, innovation hubs, and technology parks to provide support, mentorship, and funding opportunities for startups. Simplify regulations and streamline procedures for business registration to encourage entrepreneurship and innovation in the IT sector.
5. Implement policies and initiatives to promote digital transformation in key sectors such as healthcare, education, agriculture, and finance. Encourage public-private partnerships, develop digital platforms, and improve regulatory frameworks to enable the adoption of digital technologies.

In summary, by leveraging the potential of information technology, Pakistan can overcome its economic challenges. Policymakers should prioritise IT education and skills development, invest in digital infrastructure, support startups and innovation, promote digital transformation, and create an enabling environment for the IT sector through policy reforms and incentives. These measures, can pave the way for economic growth, job creation, foreign exchange earnings, and overall development in Pakistan.

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[i] https://techdestination.com/#:~:text=Why%20Pakistan%3F%0AHuman%20Capital

[ii] https://www.radio.gov.pk/05-01-2023/pm-emphasize-to-increase-it-exports-to-15bln-by-2025

[iii] https://documents1.worldbank.org/curated/en/178701467988875888/pdf/102955-WP-Box394845B-PUBLIC-WDR16-BP-Exploring-the-Relationship-between-Broadband-and-Economic-Growth-Minges.pdf

[iv] https://www.brecorder.com/news/40197381

[v] https://www.radio.gov.pk/05-01-2023/pm-emphasize-to-increase-it-exports-to-15bln-by-2025

[vi] https://invest.gov.pk/sites/default/files/inline-files/IT.pdf

[vii] https://www.wipo.int/edocs/pubdocs/en/wipo_pub_gii_2021/pk.pdf

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