KARACHI: Pakistan’s economy has seen a tumultuous time in the past two years. The change in political leadership that came with the 2018 election saw a wide range of policies and strategic frameworks introduced to modernise the current state of affairs.
After months of uncertainty and adaptation, the economy was finally on the path of resurgence when the Covid-19 pandemic hit the world and the country’s progress on the financial landscape.
At present, there are 40,000-plus virus cases in the country. Both federal and provincial governments are making arrangements to contain the spread of the disease through strict lockdowns and raising awareness of precautionary measures among the masses. Still, in the midst of these developments, an economic slowdown has begun.
Manufacturing units for non-essential commodities across the country are shut, retail stores are operational for limited hours and millions of daily-wage and low-income workers are losing their work. The government has introduced a plethora of relief packages to deal with the economic ramifications of the prevalent situation.
A Rs1.2-trillion stimulus package has been announced to cater to the needs of risky segments. The State Bank of Pakistan has slashed the interest rate, relaxed regulations for borrowers, increased the loanable pool of funds for retail banks and launched low-markup finance facilities for hospitals and businesses.
However, there is a need for extensive collaboration to ensure that the nation is able to emerge from the crisis. All stakeholders in society have to stand together with the government, pledging to acknowledge their respective responsibilities at this critical time. Social distancing is considered the most effective measure to curb the spread of Covid-19 and while it is hard from the financial and societal point of view, everyone has to play its role in winning this battle. Thankfully, we have technology to support our daily activities. Financial experts believe that the economy will suffer the greatest because most businesses are closed. Yet, technology has enabled firms to continue operations while employees are quarantined in their homes.
A major aspect facing hardships is the handling of financial transactions. For an economy where 80% of all transactions are cash-based, the elimination of paper currency has put many activities in jeopardy.
Moreover, only 21% of Pakistani citizens have a bank account and even less are using digital solutions. This enhances the challenge even further. Globally, the use of digital banking and fintech apps has surged significantly. A study found that Europe has recorded a 72% rise in the use of fintech apps.
The MENA region is reporting similar growth figures. In the Philippines, registrations for digital banking services have nearly doubled in the past few months.
Thankfully, the presence of mobile-wallet services is aiding as a robust supporting mechanism for financial transactions. Mobile wallets and digital banking applications provide solutions for all monetary needs of consumers.
Such platforms enable users to maintain mobile money accounts, transfer funds, pay bills, make digital payments at brick and mortar stores, avail discounts and make donations.
These applications don’t require bank accounts to operate and can collect or disburse payments easily. Government initiatives, leading corporations and smaller businesses are all making use of digital financial services during this crisis.
These little steps make major contributions to sustain the economy during the pandemic.
Digital banking and mobile wallets have a promising future, according to numerous financial experts. At present, the lockdowns are making these services imperative but once normality returns, the return to old ways is unlikely.
This is especially true for features like airtime, subscription for data bundles and money transfers because of the convenience and simplicity it offers. What the future holds is uncertain. Therefore, the onus falls on current times. At present, it is our duty to be an active contributor to the health and wellbeing of society. We must stand strong and resilient to defeat the present turmoil so that we emerge victorious from the fight we are facing.
The writer is the Head of Easypaisa, Telenor Microfinance Bank
Published in The Express Tribune, May 18th, 2020.