Digitisation to render youth ‘demographic liabilities’

Pakistan ranked the third-largest freelance economy in the world

KARACHI: A major factor hindering steady growth in Pakistan is lack of clear policies, which tend to change every now and then causing the country’s economy to lag behind, said Tundra Fonder Vice Chief Investment Officer Shamoon Tariq.

Speaking alongside other panellists at a session titled ‘Where to make money in Pakistan?’ at the Adab Fest 2020, he not only blamed the government for its inadequate policies but also the society.

He reasoned that the mindset of Pakistan’s society had been stagnant for the past many years and stressed the need for the society to evolve.

The business leader was of the view that the government should be provided with a reasonable matrix coupled with some guidance to frame policies and the private sector could play a vital role in achieving this.

Citing data from Bloomberg, Tariq said that in the past 10 years, businesses of Pakistan had grown more than any other country.

“If we take the KSE-100 as an example, it gave 13% returns to investors in dollar terms, which was highest in the world,” he lauded. “India’s index managed to grow at a slower pace of 11%, hence businesses in Pakistan are booming.” Talking about the grey economy, he said that figures of per capita debt and per capita income did not match the public behaviour.

“There cannot be such a huge consumer base spending exorbitantly on food, cars, fashion and luxury items unless it has the money,” he pointed out. “So while the government remains under debt, the effect does not seem to trickle down much to the people.”

Defining the term frontier markets, the official said it consisted of those countries which fell at the bottom of the economic pyramid having low incomes per capita.

Talking about the growing population base, he said that the youth, which makes up 60-70% of the entire population, could turn into a key problem for the country due to digitisation. “The process of digitisation will replace humans and around 210 million people will become jobless,” he expressed concern. “We used the term demographic dividends to refer to the youth but soon it is going to become demographic liabilities”.

Speaking on the same occasion, global investor Arshad Ashraf considered it important for young entrepreneurs to understand how investors allocated capital to countries like Pakistan. “It is a balance between risk and return,” he elaborated. “The ratio of return that you are going to get relative to the amount you are willing to risking should make sense to the investor.”

While answering a question concerning why Pakistan was lagging behind, Ashraf said that the factor behind the problem was ‘shortism’, which he defined as thinking on a short-term basis rather than looking beyond the horizon.

He expressed concern that the country was moving in a vicious cycle of dealing with short-term problems and devising short-term solutions.

“I see Pakistan as a start-up because it has all the issues of a start-up and it needs to define its business model. It needs to search for the right types of investors and entrepreneurs.”

Suggesting solutions, he said the country should look towards digitisation. “When you introduce digitisation, what happens is it takes out all the inefficiencies present in the system,” he highlighted

Moderator Nadeem Shaikh, owner of venture firm Fintech, informed the participants that Pakistan was the third largest freelance market in the world. Shaikh added that as an investor, apart from looking for good and scalable ideas, around 70% of his diligence was on the individual as well.

Ending the session on an optimistic note all the three speakers pinned their hopes on Pakistan claiming that with such enormous talent prevailing in the country, Pakistan was surely headed in the right direction.  

Published in The Express Tribune, February 4^th, 2020.

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