Digital ambition versus reality

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Pakistan's digital sector is at a crucial crossroads. Despite notable progress in some areas — such as 84% digital retail payments, growth in mobile banking and a vibrant startup ecosystem — significant structural issues threaten to derail the project. The situation is fraught with contradictions, as ambitious goals are constrained by inadequate infrastructure, inconsistent policies and stark inequalities.

Infrastructure deficiencies are exemplified by the failure to match the expansion of mobile coverage with an increase in fixed broadband. In fact, fixed broadband penetration is only 1.3%. Pakistan is also falling behind in adopting next-generation connectivity, with delays in the 5G spectrum auction and no recent investment in 3G. This means while most people can easily consume internet-based products, barely anyone can access or use the tools needed to produce software or other innovation — our internet structure, by design, can only create legions of TikTokers.

Regulatory challenges, including government firewalls, censorship and prolonged internet shutdowns, undermine the digital ecosystem, bleed local businesses millions of rupees and deter new international investors.

In addition to infrastructure issues, policy inconsistencies and financial missteps hinder growth. The recent federal budget, with confusing and poorly defined withholding and sales taxes on e-commerce, has drawn criticism from banks. Such policies can lead to a new grey economy, where online transactions are taken offline to avoid high taxes. The digital divide along gender and socioeconomic lines is another concern. Mobile phone ownership is 86% for men, but only 53% for women and internet access is 53% for men, but just 33% for women.

At the same time, the lack of opportunities in Pakistan drives around 100,000 IT professionals to greener pastures abroad every year. While Islamabad may tout its talent and forward-looking policies, the harsh realities of the market and archaic legal framework need urgent reforms to enable citizens and companies to compete globally.