Pakistan's Digital Public Infrastructure (DPI) Initiative Transforming Lives

[Riaz Haq]

Pakistan's journey to build a digital public infrastructure (DPI) began in March 2000 with the establishment of NADRA, the National Database and Registration Authority. The Gates Foundation defines DPI as follows: "DPI is a digital network that enables countries to safely and efficiently deliver economic opportunities and social services to all residents. DPI can be compared to roads, which form a physical network that connects people and provides access to a huge range of goods and services...... strong DPI has three foundational systems—identity, payments, and data exchange—that together can make life easier in important ways". 

Digital Public Infrastructure. Source: World Economic Forum

Transformational Impact:

An article recently published on the World Economic Forum website sheds light on how Pakistan's digital public infrastructure is transforming lives in rural Pakistan. Here's how it begins: 

"On a scorching day with temperatures soaring to 42 degrees, Manzoora, a mother from the flood-stricken district of Shaheed Benazirabad, rural Sindh, Pakistan, made a significant leap: she withdrew cash from her own bank account for the very first time. This milestone was made possible through a mobile cash transfer programme initiated by the Sindh government, which partnered with digital service providers to empower citizens like Manzoora. This is just one example of how DPI is changing the lives of millions of Pakistanis". 

An earlier UNDP report  titled "DigitAll: What happens when women of Pakistan get access to digital and tech tools? A lot!" written by Javeria Masood has also described the socioeconomic impact of technology in Pakistan in the following words:

"The world as we know it has been and is rapidly changing. Technology has proven to be one of the biggest enablers of change. There has been a significant emphasis on digital training, tech education, and freelancing in the last several years especially during the pandemic, through initiatives from the government, private and development sectors. Covid-19 acted as a big disrupter and accelerated the digital uptake many folds. In Pakistan, we saw the highest number of digital wallets, online services, internet-based services and adaptability out of need and demand". 

Digital Identity: 

NADRA launched Computerized National Identity Card (CNIC) the same year it was established. It uses biometric data and personal information to confirm the identity of the cardholder as a citizen of Pakistan. The CNIC card is used across the country for voting in elections, opening bank accounts, issuing passports, getting driver's licenses, registering marriages and divorces, completing real estate transactions, participating in social safety net programs like Benazir Income Support, obtaining mobile phone numbers/sims, purchasing tickets for airlines and railways, etc etc. 

The introduction of CNIC was a "foundational change, positioning Pakistan among a select group of nations equipped to manage comprehensive digital identities for over 240 million citizens", according to the World Economic Forum. Within four years of launching the Benazir Income Support Program (BISP) – a social protection initiative to alleviate poverty – CNIC issuance to adults increased by 72%. 

 

Pakistan Instant Payment System. Source: State Bank of Pakistan

Payments:

Digital identity enables payments from the government to citizens as well as financial transactions among individuals, businesses and government entities. The introduction of RAAST, an instant low-cost payment system launched in 2021 by the State Bank of Pakistan, has spurred digital payments in the country.  It seamlessly and securely connects government entities, a variety of banks, including microfinance banks (MFBs),  electronic money institutions (EMIs) and State Bank authorized payment service providers (PSPs). 

QR Codes: 

This year, the State Bank of Pakistan has launched P2M (Person to Merchant) services. These allow people with electronic wallets in their mobile phones to pay for goods and services using merchants' QR codes. “The P2M service will enable payment acceptance by businesses using quick response (QR) codes, Raast Alias, IBAN and request to pay (RTP),” the Central Bank said in an announcement. 

"All REs (regulated entities) shall enable…capabilities for processing P2M transactions via their delivery channels including mobile apps, internet banking portals and USSD channels (where applicable) by March 01, 2024." The central bank asked Raast merchant service providers (MSPs) to ensure that customers are not charged any fee on their purchases, by merchants or third parties.

"MSPs may…charge a reasonable fee from merchants for the services provided; however, they are encouraged to initially waive off such charges to promote merchant adoption."

RAAST Uptake:

Raast, the State Bank of Pakistan's Instant Payment System, is playing an important role in facilitating free, convenient and secure real-time transactions across the country, according to a report published by the State Bank of Pakistan. During Q3 of FY24,  Raast processed 140 million transactions totaling Rs. 3,437 billion.

Digital transactions took center stage in Pakistan's financial landscape during Q3 FY 2023-24, capturing a commanding 83% of 844 million total retail payments processed by Banks and Electronic Money Institutions (EMIs), while the remaining 17% were Over-the-Counter (OTC) transactions at banks’ branches, reports Mettis Global. 

Pakistan National Socioeconomic Registry. Source: Maintains

National Socioeconomic Registry:

The National Socio-economic Registry has been created . It will be regularly updated to keep it current and deliver services to the Pakistanis most in need. The effort started in earnest in 2020 to hand out Rs. 12,000 per family to 3 million most affected by the COVID19 lockdown. Here's how a Pakistani government website describes the digital registry architecture:

"The Cognitive API architecture for Ehsaas’ National Socio-Economic Registry 2021 is one of the six main pillars of ‘One Window Ehsaas’. With the survey, which is building the registry currently 90.5% complete nationwide, Ehsaas is firming up its plans to open data sharing and data access services for all executing agencies under the Poverty Alleviation and Social Safety Division (PASSD). Data sharing will be done through the Cognitive API Architecture approach. The deployment of Ehsaas API architecture for data sharing will allow executing agencies to access data from the unified registry in real-time to validate beneficiary information. This will empower them to ascertain eligibility of potential beneficiaries". 

DPI Future Plans:

In future, Pakistan is set to launch several ambitious DPI initiatives, including expanding the RAAST payment system, implementing a nationwide digital health records system, and launching a blockchain-based land registry. These projects promise to drive efficiency and transparency across multiple sectors, positioning Pakistan as a pioneer in the global digital landscape, according to a report by the World Economic Forum. 

Related Links:

Haq's Musings

South Asia Investor Review

RAAST: Pakistan's Instant Payment System

2021: A Banner Year For Tech Startups in Pakistan

Pakistan Projected to Be World's 6th Largest Economy By 2075

Digital Pakistan 2022: Broadband Penetration Soars to 90% of 15+ Po...

Working Women Seeding a Silent Revolution in Pakistan

Socioeconomic Impact of New Infrastructure in Rural Pakistan

Solar Power Boom in Pakistan

Pakistan at 75

Growing Presence of Pakistani Women in Science and Technology

Riaz Haq's Youtube Channel

 

PakAlumni Social Network

[Riaz Haq]

Government to establish 10 IT parks by next year: IT Ministry - Pakistan - Business Recorder

https://www.brecorder.com/news/40304707

The government has announced the establishment of ten new Software Technology Parks across the country by next year, according to Radio Pakistan.

This was stated during a briefing by the Ministry of Information Technology to a high-level meeting chaired by Prime Minister Muhammad Shehbaz Sharif in Islamabad.

The meeting was informed that 100 new e-employment centers will also be set up in the country by next year.

The project of Islamabad IT Park will be completed next year with the cooperation of South Korea. It will provide startups, incubation centers, banks, restaurants, and other facilities.

The meeting was informed that South Korea is also collaborating in establishing an information technology park project near Jinnah International Airport in Karachi which will be completed by 2027.

So far, 43 software technology parks have been established in 29 cities of the country.

---------

Tech parks for growth

https://www.thenews.com.pk/print/1177295-tech-parks-for-growth

In today’s fast-paced global economy, technology parks play a crucial role in fostering industrial development by providing an ecosystem conducive to innovation, collaboration and entrepreneurship.

These designated areas are often referred to as research and technology parks or science parks. They can serve as catalysts for economic growth, driving technological advancements, attracting investment, and nurturing talent. By bringing together academia, industry, and government, these parks facilitate collaboration and knowledge exchange, leading to breakthrough discoveries and technological advancements.

They are often located within or near universities so that they have ready access to highly trained workers in various fields. In Pakistan, I was involved in establishing a technology park in the National University of Science and Technology in Islamabad as well as setting up several software technology parks in early 2001 in Islamabad, Lahore, Karachi and Peshawar. More recently, an excellent technology park was established under my supervision within the Pak-Austria Fachhochschule (University of Applied Science and Engineering) in Haripur, Hazara.

Technology parks play a crucial role in enhancing the competitiveness of industries by providing access to state-of-the-art infrastructure, specialized facilities, and cutting-edge equipment. Companies located within technology parks benefit from shared resources such as research laboratories, testing facilities, and prototyping centres, enabling them to accelerate the development and commercialization of new products.

Moreover, the clustering effect of technology parks encourages the formation of industry clusters, where companies operating in related sectors can collaborate, share best practices, and access a pool of skilled talent.

[Riaz Haq]

Who owns Pakistan’s digital wallet throne? - Profit by Pakistan Today

https://profit.pakistantoday.com.pk/2024/07/15/who-owns-pakistans-d...


In 2008, a seismic shift occurred in Pakistan’s financial services landscape with the introduction of Branchless Banking (BB). This innovation sparked a digital revolution, reshaping how millions of Pakistanis access and use financial services. By the end of 2023, this transformation had reached new heights, with BB accounts soaring to 114 million—an 18.1% increase from the previous year. Even more striking, active accounts surged by 50.9% to 64.1 million, underscoring the growing adoption of digital financial solutions.

At the heart of this digital finance boom are two titans: Telenor Bank’s Easypaisa and Mobilink Bank’s JazzCash. These digital wallets have become household names, each carving out a significant portion of the market. While JazzCash leverages its vast customer base and market reach, Easypaisa, as a pioneer, boasts an extensive network of agents and merchants. Their rivalry not only fuels innovation but also raises a compelling question: In this rapidly evolving landscape, who truly leads the digital wallet revolution in Pakistan?

Both companies claim market leadership. VEON’s 2023 annual report states, “JazzCash was the largest domestic fintech platform and the most popular mobile fintech application in Pakistan.” Conversely, Telenor Bank’s annual report asserts, “The bank continued to solidify its position as a leading player in Pakistan’s digital financial sector in 2023.”

Given these competing claims, how can we determine which company truly leads the market?

History of Easypaisa and JazzCash

The advent of branchless banking in Pakistan can be traced back to the mid 2000s. We had Tameer Bank (Now rebranded as Telenor Bank) which was suffering from high delinquencies and was looking for a way out. As fate would have it, SBP was also looking to introduce the branchless banking regime in the country.

[Riaz Haq]

Govt finally admits it is tinkering with the internet - Pakistan - DAWN.COM

https://www.dawn.com/news/1852555

• IT minister says ‘web management system’ is being updated for increased cyber security
• Senate committee discusses issues faced by online businesses, fears losses in IT exports
• Software houses, business bodies demand restoration of normal speeds

ISLAMABAD / KARACHI: After months of speculation about the installation of a so-called ‘firewall’ that could be leading to internet disruptions, the country’s IT minister finally confirmed on Thursday that the government was indeed upgrading its ‘web management system’ to cope with cyber security threats.

Despite the rather ambiguous terminology used by Minister of State for Information Technology and Telecommunication Shaza Fatima Khawaja, this was the first time an official had acknowledged the government’s actions, which have been blamed for everything from slow browsing speeds, the arbitrary blocking of social media platforms and WhatsApp connectivity issues on mobile data.

So far, official stakeholders — Ms Khawaja’s ministry and the Pakistan Telecommunication Authority (PTA) — had either been feigning ignorance in response to public outcry and media queries, or claiming that the problems were because of telecom and internet service providers, or even Meta.



Meanwhile, on Thursday, users continued experiencing pro­blems in accessing social media platforms, including WhatsApp.

Downdetector, a website that provides real-time information about internet outages, received an unusually high number of complaints about disruptions in WhatsApp, YouTube, Facebook, and Instagram between 12 noon and 1pm.

The services of ISPs, including PTCL, Zong and Nayatel were also affected during the day.

‘Web management system’

While talking to reporters after the Senate Standing Committee on Information Technology and Tele­communi­cation meeting, Ms Fatima said the government had sought a report from PTA and other institutions over the internet disruption.

“The internet should never be slow. We have even been talking about bringing 5G technology to Pakistan. There is no doubt about that, and conversations about higher internet speed are underway.”

When the minister was asked about the ‘firewall’ — a blanket term used by the public to describe the causes of internet disruption in the absence of any official explanation — she said the issue had been “blown out of proportion”.

“The government has been operating a web-management system. The system is now being upgraded.”

She also called the process “a routine exercise” across the globe to enhance internet security, without giving any detail to substantiate her claims about which other countries have deployed this system.

“It is the right of the government to take measures to protect its interests given the cyber security attacks that Pakistan is facing.”

Senate body meeting

Earlier, during the Sen­ate committee’s meeting, lawmakers highlighted internet disruptions and claimed they were causing severe hindrances for online businesses.

Senator Afnanullah Khan of PML-N stated that the country was already facing an enormous economic crisis, and if the internet issue was not resolved, IT sector exports could fall significantly.

The Ministry of IT and Telecommunications secretary, Aisha Humera Chaudhry, told the meeting that there were no issues with broadband connections, but those using mobile data were facing disruptions.

[Riaz Haq]

JazzCash transforms 350,000 businesses’ smartphones into POS machines - Sponsored - DAWN.COM

https://www.dawn.com/news/1853507

The fintech platform introduced Tap-Pay for Business, allowing businesses to receive payments from contactless debit or credit cards or other smartphones with a simple tap.

JazzCash, Pakistan’s leading fintech platform, has launched its latest feature, Tap-Pay for Businesses, enabling over 350,000 businesses across the country to accept payments through their Android smartphones. This cutting-edge feature allows businesses to seamlessly receive payments from any contactless debit or credit cards or another smartphone with a simple tap on the businesses’ NFC-enabled device.

The launch closely follows JazzCash’s recent introduction of the Tap-Pay feature for customers, which allows customers to make payments directly from their phones. Together, these features will help establish an end-to-end contactless payment ecosystem in Pakistan.

Murtaza Ali, president of JazzCash, said, “Our goal is to empower both customers and businesses. With Tap-Pay, we aim to enhance Pakistan’s payment ecosystem with innovative solutions that are not only relevant but also accessible to all. This is a significant milestone as we continue to lead the way in digital financial inclusion and redefine how small businesses manage transactions.”

As of Q3 of FY 2023-24, over 47 million debit and credit cards are in circulation in Pakistan, and the State Bank of Pakistan (SBP) reported card purchases on POS machines totalling Rs394 billion during the same period. By enabling businesses using JazzCash to tap into this market, the fintech platform is opening new revenue streams for businesses and fostering greater financial inclusion.

The introduction of the Tap-Pay for Businesses feature has been made possible through a strategic collaboration with Mastercard, technology partner Wizzit Holdings, and acquiring partner Bank of Punjab. These partnerships have been crucial in developing the infrastructure required to bring this innovative feature to market.

[Riaz Haq]

APIs for IDV key to digital transformation in Pakistan and Iran

https://www.biometricupdate.com/202408/apis-for-idv-key-to-digital-...

Pakistan and Iran both have been making strides towards digital transformation, with their national initiatives playing a crucial role. In Pakistan, the National Database & Registration Authority (NADRA) recently launched the beta version of Nishan Pakistan to empower startups and entrepreneurs by leveraging the country’s digital identity infrastructure. Through an application programming interface (API) authentication gateway, Nishan Pakistan provides secure, contactless biometric verification that enables business entities to easily incorporate themselves into NADRA data. This initiative is expected to revolutionize the market as it opens up diverse application areas ranging from customer identification to creating new markets within the country.

Similarly, Iran’s authentication API, Unique Identification (U-ID) platform, which was developed by Binesh Houshmand Nasl Phoror, is at the forefront of digital identity and biometrics technology. In addition, it serves as a secured digital identity platform for Android and iOS to have immediate digital authentication that has been made with high precision and accuracy. Its application has been widespread within Iran’s law enforcement community, evolving into one of the most important components of the national digital infrastructure. Both platforms highlight the growing significance of digital identity in driving economic growth and societal transformation respectively in their respective countries.

--------------

Nishan Pakistan
Launched by the NADRA, Nishan Pakistan is an innovative platform aimed at supporting entrepreneurial ideas and providing safe biometric authentication services. The program functions as a hub for all digital activities in the country, including desktop and contactless biometric verification linked to data acquisition. To address such issues, Nishan Pakistan provides an API gateway and sandbox environment, which significantly facilitates its integration into existing business systems. It is still in beta testing and the user acceptance phase, with encouraging feedback likely to boost its uptake across the expansive digital market of Pakistan.

Pakistan and Iran’s UID
By leveraging biometric data, Iran’s UID service and Pakistan’s Nishan platform both aim to enhance security and expedite identity verification. These initiatives offer secure and efficient authentication services to the corporate and government sectors and are intricately connected to the corresponding national digital infrastructures.

As for Nishan Pakistan, it works out an inclusive API gateway that backs up multiple biometric verification options, including contactless biometric verification; however, UID in Iran stresses the technology of liveness detection in its facial recognition on online background, especially in law enforcement situations. Unlike UID’s application, which is concentrated on law enforcement and government agencies, Nishan Pakistan’s approach is more API-driven for businesses and startups to be able to facilitate wider adoption while ensuring convenience, whereas UID’s application is more centralized. Additionally, Nishan Pakistan aims to enhance user experience through easy integration. with the existing systems, while UID focuses on offline authentication through advanced encryption techniques catering to different user needs, thus indicating a divergence between accessibility and application scope.

----------------

Digital identity platforms Nishan Pakistan and Iran’s UID are both two early-stage programs that are on their way to becoming digitally transformed. These projects may still be inexperienced; however, they could contribute significantly towards security improvement, economic development, and global digital public infrastructure.

[Riaz Haq]

USF Invested Rs. 79 Billion in Rural Telecom Expansion in Last Five Years


https://propakistani.pk/2024/07/30/usf-invested-rs-79-billion-in-ru...

The Universal Service Fund (USF) has launched 85 projects worth Rs. 79.1 billion in the last five years to expand telecommunication services to rural, remote, and underserved areas of Pakistan.

According to a document seen by ProPakistani, in the last five years, USF has focused on providing 3G/4G services, launching 67 projects worth Rs. 51.4 billion. This effort has resulted in the installation of 2,600 telecom towers, covering 922 kilometers of highways and motorways, and connecting 27 tourist destinations across Pakistan.

USF’s efforts have made a significant impact, serving 24.2 million people in over 12,600 mauzas. The organization has also completed 18 optical fiber cable projects worth Rs. 27.7 billion, laying 10,260 kilometers of fiber to connect more than 926 union councils and towns.

According to the USF, the expansion of telecommunication services has far-reaching implications for the country, enabling greater connectivity and access to information. USF’s initiatives have bridged the digital divide, bringing modern communication services to previously unserved and underserved areas.

Through its projects, USF aims to promote digital inclusion and socio-economic development in Pakistan. By providing reliable and high-speed internet access, USF is empowering communities and driving economic growth in the country’s most remote and rural areas.

[Riaz Haq]

Visa’s Leila Serhan says Pakistan presents significant opportunity for digital payments


https://www.thenews.com.pk/print/1234879-visa-s-leila-serhan-says-p...


KARACHI: Senior Vice President and Group Country Manager for North Africa, Levant and Pakistan (NALP) at Visa Leila Serhan highlighted the importance of cybersecurity measures in promoting the growth of digital payments in Pakistan during an interview with The News.

Following are excerpts of her conversation:

Q: What initiative is Visa taking to safeguard users and support partner banks to combat fraud and cybercrime in Pakistan?

A: Cyber security is a top priority for anyone in the financial services industry, especially for Visa. We provide cutting-edge artificial intelligence-powered risk and fraud management solutions to our users and partner financial institutions, which greatly assist in every step of the transaction process.

The technologies like tokenization not only enhance user experience but also strengthens security by converting the 16-digit card number into a token, significantly improving security. Visa aims to introduce tokenization technology to all its partners and the entire ecosystem to safeguard consumer data.

In Pakistan, security and fraud issues, such as social engineering, are common when making digital payments. Therefore, there is a need to educate users not to share their online transaction processing data or card information via email. Furthermore, the user card verification value is confidential and should not be shared with anyone.

Visa recently announced a strategic partnership with 1Link, the country’s largest payment service provider, to simplify remittances in the country and promote digital transactions. The partnership involves integrating the Visa Alias Directory Service within the 1LINK network to streamline incoming remittances, enhance user experience and protect sensitive payment credential information.

Remittances are crucial for the Pakistani economy, as the country is one of the top 10 remittance-receiving nations in the world, according to World Bank data. Visa has simplified the remittance process, allowing individuals whether in the United Arab Emirates, Saudi Arabia or any other market to send money back home to their parents or family using a mobile number. The Visa Alias directory facilitates fast and secure transactions, and users can conveniently send and receive money directly from their mobile phones.By providing a seamless user experience and ensuring convenience, security, and cost-effectiveness in remittance transactions, efforts are made to discourage the use of illegal remittance flows to the country. This is one of our key objectives.

Q: What efforts is Visa making to increase the acceptance of contactless payments by small businesses?

A: We are collaborating closely with banks and other stakeholders to offer customized financial products and low-cost acceptance solutions, enabling small and medium enterprises (SMEs) to accept payments in a cost-effective manner. Tap-to-phone is a key part of our strategy, and we aim to expand the reach of small and micro enterprises able to accept digital payments by 10 times. We are forming numerous partnerships to promote financial literacy, expand small businesses and enhance consumer financial inclusion.

Q: How does Visa collaborate with government entities like the State Bank of Pakistan?

A: We have had a very positive dialogue with the State Bank of Pakistan. It is great that there is an active dialogue and partnership between the government and companies like Visa in the private sector. We constantly discuss how to improve the consumer experience in Pakistan, both domestically and internationally.