Covid highlights potential of a digital Pakistan

The world has faced an extremely difficult last 16 months due to Covid-19. Businesses, educational institutions and many other facilities have faced long-term closure which has a negative impact on human life. Along with other countries of the world, Pakistan also faced various problems.

Words like lockdown, social distancing and SOPs become part of our day-to-day conversation.

While we are facing many problems due to the ongoing pandemic, technology keeps us abreast with our daily work. Education shifted online mode and even business meetings were done using various online platforms. The world will reach a standstill if technology is not available for our daily tasks.

It is interesting to note that during the pandemic, people were restricted to their homes which forced them to use online channels to get their work done including financial work.

Karandaaz conducted a financial inclusion insights (FII) survey from October to December 2020. Its findings revealed measure changes in financial inclusion compared to the FII Wave 6 survey implemented from February to March 2020. Financial inclusion in Pakistan increased from 21% pre-pandemic to 25% in late 2020. This change was driven entirely by mobile money adoption. Mobile money account ownership (registered users) increased from 9% before the pandemic to 16% in late 2020. Over the same period, overall access to mobile money, including users who have not registered an account, grew from 16% to 27% of adults, as the pandemic drove an increased demand for mobile money.

If we compare the pre- and post-Covid-19 scenario, it is heartening to note that financial inclusion for both men and women grew four percentage points in the last quarter of 2020 as compared to early 2020.

Mobile money account ownership tripled among women, from 2% before the pandemic to 6% by end of 2020. Financial inclusion among women grew from 7% pre-pandemic to 11% in late 2020.

Phone ownership increased by 10 percentage points among women during 2020. However, the gender gap in phone ownership was still 33 percentage points at the end of 2020; 70% of men reported owning a phone, compared to only 37% of women.

It is interesting to note that 11% of adults used mobile money for the first time during the pandemic whereas 7% of adults registered a mobile money account for the first time during the pandemic.

The percentage of urban and above-poverty-line adults using mobile money accounts increased by 12 and 10 percentage points, respectively. Registered users of mobile money among below-poverty adults also grew by 5 percentage points.

Covid-19 impacts the behaviour of users who opted to use online services more frequently. It is noted that 77% of people pay utility bills online. People also use online channels frequently for buying groceries and clothes.

Karandaaz has been organising FII surveys since 2013 in partnership with the Bill and Melinda Gates Foundation to build meaningful knowledge about the financial landscape in eight countries across Africa and Asia. Through qualitative and quantitative research, they provide demand-side insights into consumer’s financial behaviours, and identify pathways so those most in need have the financial tools necessary to improve their economic stability.

The findings of the recent survey is a testament to the fact that people of Pakistan are willing to shift to digital platforms for conducting their day-to-day activities. This is an opportunity for the government of Pakistan to facilitate online financial services by bringing rules that make these services more user friendly.

The switch from cash-based transactions to digital payment platforms is an opportunity for the government to document the economy and bring more people into the tax net.

Published in The Express Tribune, June 26^th, 2021.

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