E-commerce: economic solution for our youth?

The sales of intl and local e-commerce sellers increased from Rs20.7b to Rs40.1b as stated in the SBP’s annual report

E-commerce has an untapped potential in Pakistan. Digital representation can change the scope of the economy and this is not a generic statement. Rather, statistics indicate that only from 2017-2018, the sales of international and local e-commerce sellers increased from Rs20.7 billion to Rs40.1 billion as stated in the State Bank of Pakistan’s annual report. Pakistan’s 64% of population comprises individuals under the age of 29, making “young people” the primary asset of this country. This means that there will be a proportionate increase in the demand for jobs. With the increased use in digital financial services, Pakistan’s GDP can increase by $36 billion and lead to creation of upto four million jobs by the year 2025. With cultural change and technological awareness amongst the youth as well as living amidst a pandemic, they are far more comfortable with embracing change from conventional methods to modern ones. Regulation of e-commerce will prove to be fruitful in terms of providing employment opportunities for 130 million people over the span of the next 30 years. Moreover, the willingness of the government to collaborate with online marketplaces for export capacity building is apparent. This is evident by the recent launch of DigiSkills, which is a training platform by the government for freelancers. This is a step towards the development of independent freelancers who can be a major source of foreign remittances in the future.

Businesses in Pakistan have witnessed an infrastructural change and while the 90s were behind in terms of a secure financial transactional system for online purchases, the situation is different today. With the Covid-19 crisis, people have switched to the online mode for even their smallest purchases which has spiked an increase in third-party online marketplace as well as e-commerce. Retailers are benefitting from Facebook and Instagram to tap potential customers and there are quite literally uncountable brands and pages run by young people. From handmade khussas to homemade and organic makeup, the opportunities are vast and numerous for entrepreneurs. This has also given the opportunity to young entrepreneurs who want to experiment with niche market products in a way that’s less risky and also saves them from investing huge amounts of capital. Once successful, a lot of these small businesses expand their operations and provide employment. Therefore, one has to agree that e-commerce is the new digital solution for business ventures. While having established this line of reasoning, Pakistan needs to take into account a couple of factors for the development of e-commerce. These include the facilitation of online transactions through companies like PayPal, enabling 4G connectivity to more remote areas, providing opportunities for vocational training in areas of marketing, sales, and e-commerce inculcating a culture of research and development that aids e-commerce.

Like other developing countries, Pakistan may lag behind in the e-commerce world if it does not technologically catch up. Realising the gravity of the situation, Pakistan introduced its first “Digital Pakistan Policy” in 2018, the aim of which was to give a boost to the IT industry through building a digital ecosystem. The “Digital Pakistan Vision” in 2019 aimed to improve connectivity, increase digital skills, promote innovation, promote technological entrepreneurship, and boost investment in digital skills. As part of “Digital Transformation”, the government has taken aboard the IT Ministry and NITB. One of the primary drawbacks that is currently faced by fresh entrepreneurs, freelancers and SMEs is the absence of a globally accepted secure transaction system like PayPal. PayPal allows one to pay, disburse, and receive payments from anywhere in the world. The benefit of taking NITB aboard is that they are in the process of establishing Pakistan’s first e-commerce export platform which is similar to Alibaba, and makes use of local alternatives to PayPal. A well thought out digital policy for e-commerce would be fruitful for Pakistan as it competes in the digital arena globally. Moreover, it could be very beneficial towards increasing exports as well as efficient tax collection. Imran Khan’s statement in the 2019 “E-Commerce Policy of Pakistan” report was that with the launch of this policy, e-commerce exports would be expected to increase by 50%. The report looks extremely promising with a major chunk devoted for policies targeted towards youth empowerment. One of the core policy concerns is to facilitate enterprises and SME start-ups run by young people, women and rural workers through e-commerce, by bringing them into the mainstream. In addition to this, to aid fresh entrants, the report also highlights the creation of an e-commerce business facilitation hub. This hub (an online portal) would serve as a gateway for entrepreneurs and SMEs as it would provide access to e-commerce platforms, legal information, advisory services and training programmes. Overall, the acceptance of the youth towards technology and introduction of this policy is a bright step towards the growth of e-commerce in Pakistan by creating an environment which provides equal opportunities for enterprises to grow steadily, transforms conventional business practices, and claims a share in global trade — all of which would be of great help to the economy.

Published in The Express Tribune, July 8^th, 2021.

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