Pakistan is experiencing a silent revolution in the field of technology, as its tech-driven startups remain under the global investors’ radar and their exports continue to surge.
Pakistani startups raised over $375 million in financing from international investors in 2021 that “was twice the aggregate figure for the last six years,” revealed Alpha Beta Core (ABC) CEO Khurram Schehzad.
During the year, around 84% of the financing was received by the logistics, e-commerce and fintech startups.
Startups valuation grew to over $1.5 billion that was “five times higher” as compared to $300 million in 2020, he said. “Healthtech, edtech and fintech are likely to invite global investors’ attention in Pakistan during 2022.”
Elaborating, he pointed out that the country had so far little access and lack of quality healthcare services.
Moreover, such investments would help provide quality education at all levels through smart channels to 50 million children, bring cash and 75% of unbanked population to the banking system and document the informal economy, he added.
“The increasing global investors’ appetite suggests Pakistani startups are poised to attract … $1 billion in 2022,” Schehzad told The Express Tribune recently.
The investment momentum will continue because some of the biggest global venture capitalists (VCs) are now eyeing Pakistan.
The silver lining comes as global investors have massive liquidity in hand for investing in lucrative markets, while interest rates remain at historically low levels globally.
“Pakistan, with around 110 million tech-savvy internet users, has remained a highly under-tapped market,” remarked Schehzad.
On a year-on-year basis, Pakistan’s IT sector exports increased 39% to $830 million in the first four months (Jul-Oct) of current fiscal year, according to a report titled “Pakistan Investment Outlook 2022” released recently by Taurus Securities.
“In five to six years, IT exports will reach around $50 billion and that is how we are going to bridge the gap (current account deficit),” Finance Minister Shaukat Tarin said in November.
IT exports were growing at a rapid pace, he said, adding that exports widened 50% in the previous fiscal year and would likely grow 75% during the ongoing fiscal year.
Pakistan has successfully established its foothold in the international freelancing market in the past few years, according to Taurus Securities.
Payoneer, in its latest report “Freelancing in 2020: An Abundance of Opportunities”, has ranked Pakistan as the eighth fastest growing freelancing economy in the world with 69% year-on-year growth.
Earlier, the world’s leading e-commerce platform Amazon invited Pakistani manufacturers to sell their products globally through its portal.
In this backdrop, the Ministry of Commerce has facilitated the enlisting of more than 30 Pakistani exporters on the global online marketplace on a trial basis.
A successful completion of the test run would provide an opportunity to more domestic firms to sell via Amazon and expand their outreach to global markets, a media outlet quoted the central bank as saying in its latest annual report.
This can potentially open a new avenue for Pakistan to increase its exports and create new employment opportunities.
The cross-border business-to-consumer e-commerce regulatory framework, developed by the State Bank, and the Web-based One Customs (WeBOC) e-commerce module, to be developed by the Federal Board of Revenue, would facilitate online sales by allowing hassle-free documentation and shipment of export orders, a media outlet underlined.
“The government is eager to boost technology and IT exports,” the research house said.
Various incentives were being granted to IT companies including establishment of 15 Software Technology Parks, zero income tax on IT and IT-enabled services exports, zero income tax on Pakistan Software Export Board-registered IT startups and tax holidays for venture capital firms till 2024, it added.
Among prominent startups that have attracted significant foreign investment are Airlift and Bazaar, as they have fetched $85 million and $30 million respectively in advanced-level Series B and Series A fund raising.
Besides, QisstPay, TAG and Oraan have received $15 million, $12 million and $3 million respectively in initial-level seed financing.
Published in The Express Tribune, January 4th, 2022.
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