A recent report suggests that Pakistan could push IT exports to $10 billion within a few years, a five-fold increase from the current roughly $2 billion a year. The report, by the Overseas Investors Chamber of Commerce and Industry (OICCI), says this would require digitising most key segments of the economy. It also notes that digitisation will also give a significant boost to the country’s GDP, attract billions of dollars in foreign investment, and create new jobs.
The target may appear ambitious at first glance, but it is actually quite prudent. India, with a population about seven times that of Pakistan, has IT exports of between $130 billion and $200 billion, depending on how one defines the related products and services. That is more than ten times the per capita IT exports of Pakistan. Even the Philippines, with a population half that of Pakistan, has IT exports valued at about $30 billion.
However, digitisation is not in itself the problem. The bigger problem is building the supporting infrastructure. From power supply to reliable and widespread and affordable availability of high-speed internet, these things are still lacking. Improvements are being made, but they are still incremental. There is also the matter of domestic drivers. Whereas India has a domestic IT market of over $50 billion, ours is barely visible.
We are still well away from having a credible e-commerce ecosystem; and regulatory improvements, though forthcoming, need to be constantly evolving to facilitate sustainable growth. The declining value of the rupee is also a problem. While devaluation can serve to attract foreign investment by making local labour and other input factors seem more globally competitive, the rupee has actually been see-sawing rather than steadily moving in one direction, making it harder to project its trajectory and reliably run the numbers before a company dare to invest millions, let alone billions of dollars in Pakistan. Willingness among citizens to change their behaviour is also necessary.
Even now, despite the government’s ambitious goals, the adoption of digital financial options remains slow. Meanwhile, foreign players are still reluctant to enter Pakistan, potentially creating new problems in terms of creating an integrated IT ecosystem.
Published in The Express Tribune, January 24th, 2021.
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