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Digital Pakistan Vision and Challenges

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Pakistan is amongst such fortunate countries where youth Population is 60% of the Total Population. This percentage of the regular users of Digital services such as Digital payments or e-Payments, Internet Access and Professionals in Smartphone usage     Provides infinite  Opportunities to succeed as going digital.

It is the gigantic and innovative initiative taken by Prime Minister Pakistan to upgrade digital  Banking infrastructure and easing the conditions or requirements and exhausting paperwork to avail digital services such as e-payments, online transactions and the issuance of credit cards, and their use at Online stores i.e in-store shopping, Fuel fill-up at stations, online utility Bill payments and Universities Fee Payment  Gateways, but unfortunately, such easy and instant payment facility is currently available to  Elite  Business class and involves too much  Paperwork, guarantees and regulations.

Government needs to overhaul the whole banking infrastructure and encourage businesses, retailers, Fuel Stations, PIA, Railways ticketing, superstores, schools and colleges to introduce payment gateways and banks should offer credit cards to businessmen and especially to government employees since they will use such services when they run short of funds, falling prey to illegal Interest-based lenders who squeeze them financially and socially.

The innovative digital payments will remove their financial constraints and the funds will be utilized based on a credit limit for 45 to 51 days and the bills can be paid through salaries decreasing chances for collateral damage or any default.

It would be great to boost and promote digital services paving the way for International digital bigwigs i.e. Google, PayPal, Amazon, eBay, Yahoo, Alibaba Group, Alipay, Stripe and Apple to enter Pakistani financial markets specially the PayPal, eBay and Amazon are strongly required by Freelancers and authors to get their Payments processed.

At Present, only Skrill, Payoneer and  Traditional IBAN/Swift code or wire transfers are available to Pakistan which is very costly, Time consuming having inflated fees of 10% to 30% plus  Bank charges of local Bank to process the amount.

On the other hand, our neighbouring country India has reaped the benefits digital world as the world’s best companies i.e. PayPal, Amazon and Google are serving the country with their innovative digital products and services.

By giving access to these  Digital Payment   Giants, Pakistan will open doors for  Foreign Direct Investment and it will also reduce the heavily demanded  Paper currency as  People avoid using cash and prefer to use their credit and debit cards at online stores, in-store shopping purposes.

Even Pakistan’s governance Model may go ahead with modernizing and upgrading  Reporting system, Complain Management, Receipts and Payments, Public Sector spending through an electronic dashboard that will refresh automatically if any  Development related or Public sector transaction takes place. Even governance could improve if governance Model is implemented by imparting pieces of training to  Staff, Officers and Officials at  Federal, Provincial and District level so that proper reporting channel may be built to ease the complicated process and ensure transparency.

The Sale and Purchase of properties and estate should be digitized and automated so that revenue records may reflect the history of Property owners to do away with any claim or objection. The Ownership certificates, Heirship certificates, Birth Certificates, Domicile, PRC and all other certificates should be generated online through developing softwares, mobile applications of  Android or ios devices that will reduce the process and improve the productivity of the Public sector Institutes.

The process of employees’ performance evaluation, superannuation and pension may also be automated so that the entire employment record will be available when they reach their point of promotion, superannuation or drawing pensions. The Personal IDs must be opened online through scale-wise Supervisors i.e.  District Accounts Officers, Account Generals of Provinces and Accountant General of Pakistan so that trail may be available to track salary disbursements.

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It is a commendable step by law and home departments to automate the Cause lists of the higher and lower judiciary but it must intimate the petitioners and respondents through SMS and email regarding their case status, date of hearing and disposing of the cases.

Furthermore, the process of voter lists should also be automated and Election Commission of Pakistan must make it available to all the citizens to register their vote when they reach at the age of 18 after getting their CNIC/Smart cards or Form B. This will enable district Election Commissioner Offices to enter the data online and consolidate the voter lists.

There should be central directorate of all the departments so that they may have coordination on digital grounds especially the FBR, AGP, Finance Ministry and Departments, Establishment division, cabinet division, NAB and Intelligence Directorates.  Digital Pakistan vision will have a great impact to attract Foreign Direct Investment, strengthening of Rupee against Dollar, stabilization of the economy and discouraging paper currency that usually falls heavy upon rupee and due to substantial pressure, the rupee gets devalued and inflation jumps up.

We are too excited after Tanya Aidrus and Baqar’s statements during Digital Pakistan Vision launch and they were very confident that their sacrifices of higher paychecks for the sake of the country are highly appreciable but they will be facing resistance from the stakeholders who have been misusing the manual system for decades and it is an uphill task to compel such elements to adopt and use this digital Endeavour which will choke their corruption stream but may streamline things for the common people.

The other resistance will be from the provinces where PTI is on opposite Benches especially in Sindh and Baluchistan. It will be a big ask and the challenge that the initiated by  IT and Telecom Ministry will achieve its desired objectives given the challenges of shortage of IT Skilled Staff and messed up the bureaucratic structure. The government should make the digital literacy a compulsory part in every ministry at Federal, provincial and district level by setting up IT Skill development centres to train the supervisory and office staff so that digital communication infrastructure may be implemented. There is no dearth of talent in our youth but they need support and sponsorship to do wonders.

Moreover, the Government should establish a venture capital firm to support, incubate, accelerate and fund the Startups that will ultimately develop and accelerate the mushrooming growth of big startups.

The entrepreneurship courses must be introduced with help of  SMEDA, LUMS, IBA Karachi, IBA, Sukkur, SZabist, NUST, FAST, COMSATS, Virtual University and SDPI  so that entrepreneurs may learn to launch their startups successfully to conquer the digital world.

The Startups such as Careem, Bikea, and Rozee.pk are some the great examples of successful Startups. Globally, the Youth after getting their education, start their businesses to create employment but in Pakistan youth after passing Graduation and Masters, start hunting for a job. That is why Pakistan has a high level of Unemployment as youth avoid entering the entrepreneurship since they lack skills, training and financial resources. Punjab IT Board has done a tremendous job by incubating, funding and accelerating startups in public sector under the Plan9 and PlanX programs but it should be followed by all the Provinces so the proper Startup culture could be developed.

Higher Education Commission, IT Boards, Technical Education, Intermediate education boards should promote digital Pakistan vision by introducing governance, payment solutions and fund the Ideas at School and college level.

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It is a good sign that  Online shopping Sites have experienced a mushrooming growth but mostly they accept the traditional Cash On Delivery Model (COD) which often causes losses if the customer returns the product or unavailable or Unwilling to receive the product.

Epayments ensure that product is shipped to the target buyer or customer who needs it. Though some Online shopping sites such as Popular Daraz.pk and Yayvo.com have started accepting Credit/Debit Cards issued by Pakistani Banks but still the number transactions is very low owing to hassles involved in getting credit cards from the banks.

At present, Only a few banks are issuing Credit Cards with Online Transactions and Point of Sale (POS) Transactions that include  Standard Chartered Bank, unfortunately, limited to big cities such as Karachi, Lahore, Islamabad, Other one include Bank Al Falah which issues Credit Cards on quick processing lasting for 10 to 20 days.

Silk Bank is also the favourite bank of many customers who are interested in digital Transactions. Silk Bank offers a wide range of Credit Cards as per Income Levels of customers. UBL is also offering credit cards but it has too many conditions and terms.

Besides, these banks there other banks that are issuing credit cards such as  HBL, MCB, ABL, Faisal Bank, Askari bank and JS banks. The average interest or Mark up charged   40% which is very high as compared to other countries. The government especially state Bank of Pakistan must direct the public and Private banks to lower the markup ratio and ease the conditions to avail this facility especially suited to salaried class and Businessmen.

In Big cities, credit cards are issued instantly by Commercial Banks to the salaried Employees of Government and Companies but in small cities, the untrained and local managers avoid issuing credit cards to customers since it involves risks of recovery or payment of credit Bill.

I have personally visited many banks where I maintain my bank account, but regrettably, all the managers expressed their inability or forbade to get  Credit Cards since it is very costly and you cannot be issued credit cards in small cities.

Well, one will surely experience such embarrassment and inconvenience at the hands of Non-Professional Managers who are picked to only raise the deposits whereas the quality of service is compromised at the hands of such amateurs.

Therefore, Ms Tanya Aidrus head Digital Pakistan Vision and her team at Digital Pakistan Initiative will have to work out to appease the stakeholders to achieve the desired goals set as per the tenure of PTI so that Pakistanis may reap the benefits from this digital world.

To achieve this goal, the portfolio of IT and Telecom ministry must be given to a professional who should be well versed in IT and telecom preferably a Computer science or IT Graduate to pilot this project to achieve the goals in given clear framework.

There is also a big concern regarding inflated Taxes levied upon the business community which need to be reduced if they use Digital currency since Digital Currency will enable FBR to track payments and appraise the financial strength of the Individuals.

The e-Currency spectrum will help reduce the  crime rate, tax evasion, hoarding of money as  People will use credit cards and digital wallets such as  PayPal, Ali Pay, Google pay  those  can easily be tracked and monitored through digital systems,

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Fintech NayaPay Secures $13M As It Rolls Out Digital Payments In Pakistan

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NayaPay, a Pakistan-based fintech platform, has raised $13 million in one of the largest seed rounds in South Asia. Bringing together a diverse mix of leading global institutional and angel investors, the round was led by Zayn Capital, global fund manager MSA Novo and early-stage VC Graph Ventures from Silicon Valley.

Singapore-based Saison Capital, Waleed Saigol’s Maple Leaf Capital, and Warren Hogarth, CEO Empower Finance, also participated in the round, alongside a major investment from the sponsors of the Lakson Group – a Pakistani conglomerate with interests in media, telecom, industrials, financial services as well as controlling stake in Colgate-Palmolive Pakistan and McDonald’s Pakistan.

NayaPay is the first fintech of its kind in Pakistan having recently secured the first E-Money Institution license from the central bank, State Bank of Pakistan. It is on a mission to make financial services simpler and accessible to millions of Pakistani users. NayaPay aims to be at the forefront in the digitization of Pakistan with its two-sided platform for the underbanked.

Pakistan presents a significant market opportunity for NayaPay, where over 50 million adults are unbanked and only 33% of women have a bank account. With 70% of the population under 35 years old, there is a significant mobile-first generation.

Almost $4tn payments are made each year but only 1% of these are made digitally currently. On the merchant side, the majority of SMBs in Pakistan are unregistered, have traditionally dealt primarily in cash, and have very limited access to business banking.

The fintech has launched its chat-led super app targeted primarily at students and freelancers, and is building a SaaS-based platform called NayaPay Arc offering universal payment acceptance and financial management tools for SMBs.

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NayaPay’s platform strategy will harness the network effects between consumers and merchants, as seen in platforms such as Square Cash/Square, WeChat Pay, AliPay, and Venmo in their native markets.

NayaPay CEO and Founder, Danish A. Lakhani, commented, “NayaPay is empowering young Pakistani adults starting their financial journey, from students stepping into adulthood to freelancers and entrepreneurs taking an active role in managing their finances. In many senses, it’s a coming-of-age moment for many and our goal is to continue to innovate and build functionality to become a part of their daily lives, for the rest of their lives.”

Danish A. Lakhani added, “Micro, small and medium businesses make up 90% of the merchant base in Pakistan, and yet they are underserved when it comes to access to basic financial services. NayaPay Arc will provide universal payments acceptance and a range of business financial management tools to empower entrepreneurs and small business owners.”

“The tools are intended to give business owners visibility of their cash flows, pay suppliers and grow sales. Our goal is to enable them to focus on growth while we take care of the rest. By helping small businesses harness the power of technology, we believe we can transform the Pakistani economy,” he added.

Faisal Aftab, Managing Partner and Co-Founder at Zayn Capital Frontier, said, “We are very bullish on fintech in Pakistan. While just beginning to emerge, Pakistani fintechs have the advantage of learning from peers and placing better informed strategic bets.”

“We were impressed by the completeness of the vision of the founding team at NayaPay, and their differentiated platform-based strategy — first focused on servicing the needs of underbanked consumers and SMBs with specific use cases and building out from there. With a proven ability to execute on the ground, the founder has an impressive track record of building and scaling businesses in Pakistan, including the country’s largest fiber broadband service (StormFiber),” he added.ADVERTISEMENT

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Omar Siddiqui, General Partner at Graph Ventures, added, “We are excited to partner with Danish and the NayaPay team as they scale their leading digital payments platform for consumers and merchants in Pakistan. We have been early-stage investors in 300+ companies over the past decade in the United States, Southeast Asia, and Latin America, and we are excited to see the mobile and fintech technology trends that have empowered consumers in these markets also emerge in Pakistan.”

“NayaPay already offers the most robust solution for consumers to access next-generation financial conveniences in Pakistan, and we look forward to working with the team as they roll out new products and grow their consumer base,” he further said.

Danish A. Lakhani concluded: “Customer trust is a key pillar of any platform’s success. At NayaPay, we are consumed by our obsession to simplify the lives of both consumers and merchants with our app and NayaPay Arc while supporting our customers with robust and scalable technology and fanatic customer service. We are also partnering with leading banks to provide additional value and convenience to our mutual customers, eventually leading to a full digital banking experience.”

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The Digital Economy

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The economy and society are undergoing profound changes as a result of digitalisation. It fuels entrepreneurial innovation, regional economic growth, and productivity. Additionally, it has consequences for economic growth, the labour market, and political engagement. And it imposes new educational and training requirements – not just in the realm of information and communication technologies.

Today, as the world prepares for 5G technology, the IT think tanks in Pakistan must seriously consider efficient ways to catch up with the world and maximise economic benefits.

Despite considerable expansions of ICT access prior to the COVID-19 crisis, the ICT availability and use remained far from universal. The COVID-19 crisis expedited advanced economies’ digitalisation and made catching up more difficult for nations or areas trailing before. We must explore the current state of digitisation in Pakistan, its economic impact, and how should we pave the way for future technologies.

Digitisation is regarded as the fourth industrial revolution. However, in Pakistan’s case, we may not be at par with the world. The biggest challenge that the country faces is the overall readiness to completely make use of digitisation. According to the World Bank 5G readiness plan, the Government of Pakistan (aligned with the Pakistan Telecommunication Authority) must devise a strategy to attract multinational organizations to invest in a digital transformation infrastructure. There remain multifaceted challenges to Pakistan’s adaption of 5G technology. Despite a huge growth potential, we see that the Foreign Direct Investment in the telecommunication sector has dropped from a staggering US$763 million in the FY 2019-20 to a meagre US$202 in the FY 2020-1. The primary reason for this drastic drop in investment is the poor adaptability of technology amongst the population.

The economic contribution of the mobile industry in Pakistan might reach $24 billion by 2023, accounting for 6.6 per cent of the country’s gross domestic product.

5G technology offers endless economic and industrial benefits. Up to $3.5 trillion in revenue is expected to be generated by the 5G value chain by 2035, with up to 22 million employment being supported.

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The Global GDP growth will increase by $3 trillion cumulatively between 2020 and 2035, according to projections based on 5G deployment. By 2035, 5G-related services, such as mission-critical services, increased mobile broadband, and enormous IoT improvements, would be worth over $12 trillion, according to estimates. Retail, healthcare, education, transportation, and entertainment are among the areas projected to benefit from 5G technology.

According to the Pakistan Telecom Authority (PTA), the country has over 98 million 3G/4G subscribers or 43.51 per cent penetration. Despite network advancements such as the addition of new 4G towers, over 90 per cent of mobile devices constructed or manufactured in the country are only compatible with 2G technology. At the moment, roughly 53 per cent of all SIM subscribers utilize 2G devices. The experts believe that for a successful transition to the 5G technology, at least 60 per cent of the population must be connected to the 4G technology.

The broadband penetration is only about 46.4 per cent in Pakistan, which must be expanded drastically to ensure economic benefits. Amongst many challenges that hinder the technology adaption in Pakistan are, “the lack of large contiguous blocks of the affordable spectrum”, “broader access to fibre backhaul” and “widespread availability of affordable 5G smartphones and other devices.”

Pakistan’s IMT spectrum management policy has been identified as the primary impediment to the sector investing fully in 4G development and sector competitiveness.

The current government does seem to have a good plan of action to boost the 5G technology in the country – some of which include:

o Tax rebate, tax rationalization, and elimination of duty tariff on import of all components of high end 4G and 5G devices;

o Duty-free IMT/5G network-ready equipment imports to facilitate 5G readiness and mobile broadband to support wider mobile broadband and 5G networks deployment;

o Special incentives for global Telecom equipment vendors to establish assembly and production lines in Pakistan to promote local assembly of IMT/5G and IoT ecosystem devices including chipsets, and

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o Licensee shall establish at least one 5G Innovation and test centre/lab to scale up 5G ecosystem for start-ups and entrepreneurship activities at their own cost for citizens.

All these are indeed solid items on the action list but the Mobile Economy Asia Pacific Report 2021 projected, “Pakistan will be at the lowest end in terms of smartphone users as well the 5G coverage among the selected countries of Asia Pacific region by 2025.” According to the GSMA estimate, the economic contribution of the mobile industry in Pakistan might reach $24 billion by 2023, accounting for 6.6 per cent of the country’s gross domestic product. The same report estimates, smartphones will account for over 80 per cent of all connections in the Asia Pacific by 2025, up from 68 per cent in 2020. However, Pakistan was near the tail-end of the list of 12 major countries, just above Bangladesh, and it is expected that neither of these two countries will meet the 80 per cent target in the near future.

The 5G technology will be a game-changer for Pakistan. The Small and Medium Industries could benefit greatly by adopting online selling techniques, reaching global markets, and learning from international best practices, supply chain, and business operation strategies. Pakistan’s education and medicine industry is expected to be the biggest beneficiary of the 5G technology with its low latency and widespread applications, which can help overcome the poor student-teacher ratio that currently stands at 29 to one.

The truth is that it is not as easy as it may seem to the officials, from 2017 through 2035, the world will need to invest $3.7 trillion, or 4.1 per cent of global annual GDP per year, on infrastructure to overcome existing gaps. Of this amount, 54 per cent will go towards meeting the needs of Asian countries. Therefore, experts in Pakistan must carefully consider their approach to resolving the challenges in 5G technology and adopting a single national strategy.

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PM for use of modern technology to bring country’s population into formal economy

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Prime Minister Imran Khan Tuesday while terming the 220 million population of the country as ‘the biggest human resource and asset’ underlined the need of bringing all into the formal economy through use of modern technology and gadgets.

The prime minister was addressing the launching ceremony of “Raast”, Pakistan’s instant digital payment system, an initiative of the State Bank of Pakistan. The initiative would enable person to person transactions and facilitate free digital banking.

The prime minister observed that unless they utilized the modern technological revolution to bring the whole population into the loop of formal economy, this huge asset would, otherwise, become a burden.

Appreciating the efforts of SBP to facilitate people over the banking system, he said the common man often hesitated in visiting the banks, stressing that steps at ‘bottom up’ would bring the commoners into formal economy by easing their modes of payments and transactions through opening of accounts via Raast.

The prime minister said the performance of the Pakistan Tehreek-e-Insaf government would be judged in the year 2023 on the basis of its measures to reduce poverty.The UNDP report had placed Khyber Pakhtunkhwa as the only province in the country where the PTI’s government during its first term had successfully reduced poverty, he added.

The prime minister said due to such achievement, the people in KPK voted for the PTI in the 2018 elections.He further opined that it would be a great success of his government to lift the people out of poverty. The Covid pandemic had affected the world population alike but the government in Pakistan took measures to save its people from the economic meltdown and inflation, he added.

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The prime minister noted that saving rates and tax-GDP ratio was low in Pakistan when compared with the rest of the world and it could be increased by making technological advances and by fine tuning the formal economy.

For increasing tax revenue, he said, usage of technology was being ensured by the Federal Board of Revenue as out of 220 million population, only 2 million were paying taxes.
The prime minister said that they had collected data of those people who were living a luxurious life but not paying any taxes.

Referring to 9 million overseas Pakistanis as valuable assets for the country, the prime minister suggested establishment of a cell to further facilitate them in sending their remittances home.

He said their remittances had helped in supplementing the country’s foreign reserves.
The prime minister stressed that they must make efforts to ensure direct financial support to the lower segments of society through use of modern technology and cited the rolling out of Ehsaas Ration Programme in this regard.Speaking on the occasion, Governor State Bank of Pakistan Dr Reza Baqir said that ‘Raast’ would bring revolution in the banking payment and transaction modes and it was part of different initiatives launched by the SBP under its digitization programme.

The SBP governor explained that the initiative had four main characteristics including opening of fast payment account, free of cost transactions, the easier way of person to person payments and availability of all banking channels.

Reza Baqir said in previous year, $500 billion e-banking transactions were made which had been more than the country’s $370 billion GDP, witnessing 30 per cent growth rate.About 190 people in the country had mobile phones and 80 million people had bank accounts, so there was a need to facilitate those who had no cell phone links with their banking accounts or have no accounts at all.

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He said due to the government’s initiative to facilitate and support the lower and middle sections of society, including housing finance, about Rs131 billion worth loans had been approved by the banks.

Minister for Finance Shaukat Tarin suggested that the government’s certain initiatives like Kamyab Jawan, Kamyab Pakistan and Ehsaas ration programmes could be linked with this initiative.He said the government was taking all measures to protect the lower and middle classes from the effects of inflation and in this regard, they would unveil a few new pogrammes in the next few weeks.

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