Digital Transformation: Pakistan is Now Online!

[Riaz Haq]

Pakistan's digital transformation is in full swing. Over three-quarters of Pakistanis living in the top three metros of Karachi, Lahore and Islamabad are connected to the Internet, according to a report titled "Journey to Digital" produced by global tech giant Google and Kantara consultants. Researchers found that two-thirds of urban and nearly half of rural Pakistanis regularly use the Internet in the South Asian country of 220 million, the 5th most populous nation in the world. It has a young population with the median age of 22.8 years. 46% of Pakistanis access the Internet everyday.  They use the Internet for education, entertainment, shopping and to search for information.

Over Half of All Pakistanis Are Connected to the Internet. Source: Google-Kantar

Pakistan has seen a phenomenal growth of 3500% in broadband subscriptions over the last 8 years . Pakistanis now own more than 103 million smartphones with mobile broadband subscriptions. In a Youtube presentation of the report, Faraz Azhar, Industry Head, Performance, South Asia Frontier Markets, Google said: “With half of its population on the internet - Pakistan is now online!"  

Google Search and YouTube are the most popular Internet applications in Pakistan, according to the study. YouTube is used by nearly 90% of all internet users in Pakistan for streaming music and watching video/TV, and 38% of Pakistan's internet users go to YouTube in the research phase of their shopping journey. 

Pakistan has also experienced an e-commerce boom in the midst of the COVID pandemic. 71% of Pakistani shoppers find purchasing products or services online easy, while 66% find it convenient. Another 54%  find that online shopping websites or apps give personalized product recommendations, which answer common questions. Two-thirds of consumers believe that online shopping is the way forward. They say they will continue to buy products or services online after the COVID-19 pandemic.    

Faraz Azhar, Industry Head, Performance, South Asia Frontier Markets, Google said: “With half of its population on the internet - Pakistan is now online! This is the first time Google and Kantar released a study to understand more about Pakistan’s internet population. But it’s not only about people getting online, this research has uncovered new insights and behaviors that show how COVID is impacting online behaviour and the digital opportunities waiting to be unlocked.” 

Global Investors of Pakistani Startups. Source: Google-Kantar

"More people are coming online in Pakistan, creating a great opportunity for eCommerce businesses - if they are ready to seize it. As we see more exploration of the internet beyond social, e-retailers can capture natural cross-category purchasing on its rise, but only if they have first established themselves and their product offering in an online marketplace," he said.

Pakistan Startup Funding. Source: Google-Kantar

With expanding Internet infrastructure and rapidly growing user base, Pakistan is now seeing robust growth in venture money pouring into technology startups. Pakistani startups are on track to attract more than $230 million in funding in 2021, more funds than all the money raised by Pakistani startups in their entire history. A recent example is Kleiner Perkins, a top Silicon Valley venture capital investment firm, that led series A round of $17 million investment into Pakistani start-up Tajir. The startup operates an online marketplace for small store merchants in Pakistan. The announcement came via a tweet by Mamoon Hamid, a Pakistani-American Managing Partner at Kleiner Perkins who led the investment. Last year, Tajir raised a $1.8 million seed round.  The company's revenue has increased by 10x since its seed round. 

Pakistan Technology Exports Trend 2007-2021. Source: Arif Habib

Pakistan's technology exports are experiencing rapid growth in double digits over the last decade. Total technology exports jumped 47% to $2.1 billion in fiscal year 2020-21. 

Pakistan University Enrollment Growth. Source: Encyclopedia of High...

The foundation for Pakistan's digital transformation was laid with the higher education reform and telecommunications deregulation and investments starting in the year 2001 on President Musharraf's watch. With huge increase in higher education funding, Higher Education Commission Chairman Dr. Ata ur Rehman succeeded in establishing 51 new universities during 2002-2008. As a result, university enrollment (which had reached only 275,000  from 1947 to 2003) soared to about 800,000 in 2008. This helped build a significant human capital that drove the IT revolution in Pakistan.      

Here's a video presentation of Pakistan's "Journey to Digital":

https://youtu.be/7mlSvA7MyWo

 

Related Links:

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COVID19 Pandemic in Pakistan

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Riaz Haq's Youtube Channel

PakAlumni: Pakistani Social Network

[Riaz Haq]

The Ordinance provides 100% tax credit and an exemption for startups.

https://taxbeing.com/tax-exemptions-for-startups-in-pakistan/

100% Tax Credit Against Income Tax Liablity of the Startup
Profits and gains of startups were exempt from income tax up till promulgation of Tax Laws (Second Amendment) Ordinance, 2021 on March 22, 2021.

Effective from March 22, 2021, income of a startup is not exempt from income tax; instead, startups have been allowed a 100% tax credit against their income tax liability.

There are SIX conditions attached to eligibility for 100% tax credit. These conditions are enumerated below:

The startup is required to be certified by the Pakistan Software Export Board (PSEB).
100% tax credit is available in the year of certification by PSEB and the next following two years.
The startup has filed the income tax return.
Tax required to be deducted or collected has been deducted or collected and paid by the startup. In other words, the startup has discharged its duty as a withholding agent. For further details on withholding of taxes, read this article.
The startup has filed with FBR the withholding tax statements for the immediately preceding tax year.
The startup has filed the sales tax returns for the tax periods corresponding to the relevant tax year. Therefore, relevant sales tax registration (PRA, SRB, BRA, KPRA, FBR) is also must.
The startups are eligible for 100% tax credit regarding tax payable under any provisions of ITO, 2001 including minimum tax and final tax. However, the startup can be subjected to audit proceedings u/s 177 and 214C.

[Riaz Haq]

In the first two months of the year, start-ups elicited $23.74 million in contrast to the $37.1 million received in 2020.

https://www.dhakatribune.com/business/2021/02/28/bangladeshi-start-...

The funding in 2018 and 2019 make up almost two-thirds of the total disclosed funding worth $317 million in the start-up segment over the past decade, according to the LightCastle Partners study.

Not all the start-up fundings are disclosed and therefore the actual funding may be higher, the report said.

A total of 78 companies got funding through 146 deals, of which 80 deals were disclosed.

Half of the total fund of $317 million was invested in the fintech start-ups while a third in the logistic and e-commerce businesses.

“It is a very promising time for start-ups as there is a lot of overall interest for investing in Bangladesh, especially from abroad,” said Rahat Ahmed, chief executive officer and founding partner of Anchorless Bangladesh, a New York-based venture capital firm focused on fostering the start-up ecosystem of Bangladesh.

[Riaz Haq]

https://www.brecorder.com/news/40121452

ISLAMABAD: The number of 3G and 4G users in Pakistan reached 103.12 million by end-August 2021 compared to 101.59 million by the end-July 2021, registering an increase of 1.53 million, revealed Pakistan Telecommunication Authority (PTA) data.

The number of cellular subscribers in Pakistan increased by 0.67 million to 185.57 million by end-August 2021 compared to 184.90 million by the end of July.

Teledensity for cellular mobile increased from 84.41 percent by the end of July 2021 to 84.67 percent by end-August. 

The total teledensity increased from 86.55 percent by the end of July 2021 to 86.81 percent by end-August.

Monthly Next Generation Mobile Service (NGMS) penetration stood at 47.05 percent by end-August 2021 compared to 46.38 percent in July 2021.

Jazz’s total count for 3G users stood at 7.438 million by end-August compared to 7.598 million by the end of July 2021, registering a decrease of 0.16 million. 

Jazz 4G user numbers jumped from 31.745 million by the end of July 2021 to 32.767 million by end-August. Zong 3G subscribers decreased from 4.204 million by the end of July to 4.046 million by end-August, while the number of 4G users jumped from 23.581 million by the end of July 24.099 million by end-August.

The number of 3G users of Telenor decreased from 4.984 million by the end of July to 4.777 million by end-August. The number of 4G users jumped from 17.791 million by the end of July 18.333 million by end-August.

Ufone 3G users decreased from 4.373 million by the end of July to 4.292 million by end-August.

The number of 4G users of Ufone increased from 6.212 million by the end of July 2021 to 6.246 million by end-August.

[Riaz Haq]

#Pakistan’s #Fintech #startup Oraan raises $3M to increase #financialinclusion among #Pakistani women. #technology | TechCrunch
https://techcrunch.com/2021/09/26/oraan-raises-3m-to-increase-finan...

After working as an investment banker in Canada for a decade, Halima Iqbal moved back to Pakistan in 2017 and quickly realized how difficult it is for women to access financial services. “I had a really hard time opening up a basic bank account. It took me about three and a half months,” Iqbal told TechCrunch. She began researching how Pakistani women deal with money—for example, how do they save or take out credit?

Then she met product designer and entrepreneur Farwah Tapal, who had recently returned to Pakistan from Spain, and the two created Oraan in 2018 to help women access financial services. The startup announced today it has raised $3 million in funding, co-led by returning investor Zayn Capital and Wavemaker Partners, with participation from Resolution Ventures, i2i Ventures, Hustle Fund, Haitou Global, Plug and Play and angels like Claire Diaz-Ortiz, a former investing partner at Magma Partners and early Twitter employee.

Oraan has now raised just over $4 million in funding. Iqbal and Tapal said they are the first women entrepreneurs in Pakistan’s fintech space to raise a seed round.

“There was an opportunity, how can we understand the saving space and informal economy in Pakistan, and where can we capture that?” Iqbal said.

Oraan decided to start with ROSCAs (rotating credit and savings associations), or committees of people who contribute money to a pool that is distributed to a member each month. It will expand into more financial services, with plans to become a digital bank.

Based on Oraan’s research, only about 7% of Pakistani women are financially included, meaning they have at least a basic bank account. For many women, trying to access financial services means facing logistical and social barriers.

“When a woman goes into a bank, the first question we get asked is ‘why do you even need bank account?,’ especially if you’re a freelancer or micro-entrepreneur or unemployed homemaker,” Iqbal said, adding that women are often asked to provide their husband or a male relative’s information so they can serve as a guarantor. “These kinds of restrictions have hindered women from having the kind of financial mobility that they require to be able to contribute equally to the economic growth of the country.”

Traditionally, ROSCAs are formed within communities, for example among family members, friends or neighbors. Then each person puts in a set amount of money per month. Who gets each month’s pool of money is decided by the committee, sometimes by a vote or random draw.

Iqbal and Tapal decided to start with ROSCAs because almost everyone they know had participated in an informal one. Based on Oraan’s research, about 41% of the Pakistani population has participated in a ROSCA and $5 billion gets rotated through them on an annual basis.

“The scale of use and what it provided to the user was just so fascinating,” Iqbal said. “This is a goldmine to create something valuable for the end user, as well as a business opportunity.”

Oraan formalizes ROSCAs, offering five-month or ten-month plans. One of the main differences between Oraan’s ROSCAs and informal ones is that users can pick which month they want the pool of money, because the app’s treasury management backend forms committees based on members’ needs and ability to pay.

[Riaz Haq]

Digitization of Rotating Savings
and Credit Associations in
Pakistan

https://karandaaz.com.pk/wp-content/uploads/2019/05/Digitization-of...

Executive Summary
This research investigates the scope for digitization of Rotating and Savings Credit Association in Pakistan on the rails of Digital
Financial Service and its potential to increase DFS uptake. 36% of the people in Pakistan save money, but only 4% of those save money
with a formal financial institution, while 33% save through saving clubs called Kamaitis, the local version of Rotating Savings and
Credit Associations (ROSCAs). Its digitization presents an opportunity to bring people to DFS by digitizing a behavior with which
they are familiar.
We follow a Human Centered Design process in 3 phases namely inspiration, ideation and implementation.
INSPIRATION
This phase consisted of semi-structured qualitative interviews with 80 participants including ROSCA organizers, members and nonmembers. The sample was varied across gender, locality and ROSCA size. The purpose of the qualitative research was to investigate
technology ownership and usage, understanding of and familiarity with mobile money and banking services, and how the overall
ROSCA structure works including motivations for joining ROSCA, problems faced in managing and participating in ROSCAs and
the functioning of ROSCAs.
We studied the functioning of and challenges encountered throughout the ROSCA cycle, which consists of motivation, group
formation, formalization, collection and disbursement and assignment, and exchanges.
Following are the main findings from inspiration phase:
• Social capital is an important element in the functioning of ROSCAs, from group formation stage to disbursements, and in
resolving problems which arise during ROSCA cycle.
• The main motivations for joining ROSCAs include forced saving (37.5%), purchasing durable goods (30%), buying or building
a house (27.5%), starting or expanding a business (22.5%), wedding expenses (20%), religious obligations (17.5%), and
educational expenses (15%).
• In group formation, organizer plays the key role and participants are recruited by the organizer. Social capital exists between
organizers and individual members, but not between members.
• Formalization through rules is more prevalent in large ROSCAs (which require legal documentation) than in small ROSCAs
(which rely on rules and verbal commitments).
There are two popular methods of pot allocation: lucky draw and need-based assignments. Lucky draws are more common in
small- and medium-sized ROSCAs, whereas large ROSCAs have need-based assignments. Turn exchange is a very common
phenomenon facilitated by the organizer.
• Collection and disbursement are done in physical cash mostly. Either the organizer has to go to submit the amount or the
organizer has to collect the amount. Collections take place daily or monthly. Women have problems in collection and
disbursement due to mobility issues.
• Record keeping is done by the organizer, and is one of the core functions in managing of ROSCAs, increasing in complexity
and sophistication with an increase in size of the group. Record keeping is challenging for the low literate organizers, who
often seek help from intermediaries, hence compromising the privacy of the group. Women are more avid record keepers.
• Delayed payments are commonly reported, but there is no standard mechanism to handle it. Different groups have devised
different penalties for delayed payments – monetary penalties proved to be dysfunctional due to the high social capital,
therefore, non-monetary penalties were employed by the organizers to deal with these issues.
• Frauds were not experienced personally by any of the participants, but they had heard about instances of fraud.

[Riaz Haq]

#Pakistan Launches #STEM program for youth. It is being initially introduced in 50 schools (grades 9-12) with building of special laboratories and teachers training. Students will be enrolled "based on their ability and talent" #science #STEMeducation https://www.dawn.com/news/1650447

President Dr Arif Alvi stressed on Wednesday the need to focus on Science, Technology, Engineering and Mathematics (STEM) subjects in the education sector, saying it was important for the country and people to progress.

Addressing a ceremony held to launch the STEM programme for higher secondary school students, he compared Pakistan with its neighbouring countries in this regard.

"China produces around 4.7 million graduates in STEM subjects every, while India produces around 2.6 million and Iran 350,000. And where do we stand?" the president said, adding that he believed that the number of STEM graduates was lower in Pakistan.

He called for increased focus on STEM in the education sector, saying that it was crucial for the nation to compete with the rest of the world so that it did not lag behind and progress.


The STEM programme
According to a report by Radio Pakistan, the programme, which will train students in STEM subjects, will be launched by the Ministry of Science and Technology in 50 government-run higher secondary schools across the country.

Students of grades 9 to 12 will be enrolled in the pilot programme and selected "based on their ability and talent", it added.

In a video message ahead of the programme's launch, Minister for Science and Technology Shibli Faraz said STEM subjects had acquired a "special importance" in the world.

Sharing details about the programme, Faraz said the programme was planned in 2020 and he and his team had worked on it day and night to give it "practical shape".

Initially, the programme would be introduced in 50 schools, he said, adding that special laboratories would be built and teachers would be given specific training.

"These schools will also be associated with universities. The schools have been selected purely on merit, not political reasons. The principals will be our guests [in today's event]."

A new era of progress will start because of these STEM schools in which we have given a new direction to the education system to make our students competitive globally, he further said.

The programme would have three aspects — labs, teacher training and STEM modules, he shared.

Meanwhile, Information Minister Fawad Chaudhry, who previously held the portfolio of science and technology, termed the programme a "game changer".

He said he had designed the programme because the country will "not change" until government schools are modernised.

"I am very happy that this plan is turning into a reality despite delays," he said in a tweet.

The minister expressed hope that more schools would adopt the STEM model following its implementation in 450 schools initially. Universities have been instructed to "adopt" schools and improve the level of science education, he shared.

Last year, Prime Minister Imran Khan had approved the STEM project in collaboration with varsities.

The Prime Minister's Office (PMO) had said at the time that special laboratories for science and technology, engineering and mathematics would be established in 40 schools in the first phase.

Around 100,000 children in 400 schools will have access to education and training in modern sciences through the project.

[Riaz Haq]

Country's first 'Digital Dera' established in Pakpattan - Pakistan - Business Recorder

https://www.brecorder.com/news/40124535

Agriculture Republic, a think tank, in collaboration with the Internet Society Global has set up Pakistan's first "Digital Dera" at remote village of Pakpattan district to train 15,000 farmers of the area in digital farming practices by providing them access to latest technology and resources in the farming sector.

In the first phase, two desktop computers and three tablets have been made available at the Dera which been equipped with a fast brand-band connection in an air-conditioned atmosphere powered by a solar system.

The rise of digital agriculture and its related technologies has opened a wealth of new data opportunities and has the potential to change agriculture for the better. According to the Food and Agricultural Organization (FAO) estimates, by 2050 Internet of Things (IoT) can help increase agricultural productivity by 70 percent. Technologies such as laser land leveling, solar-powered high efficiency irrigation systems, smart water grids and unmanned aerial vehicles (UAVs) are now being used for agriculture.

Director General Agriculture (Extension) Punjab Dr Anjum Ali Buttar, who was the chief guest at the inaugural, said that the government was taking all-out steps for introduction of climate smart agricultural practices in the province. He said that changing weather patterns demand introduction of new crop varieties resistant to climate change.

"The Digital Dera is an attempt to empower local farmers through the internet connectivity and access to digital knowledge economy," said Agriculture Republic co-founder Aamer Hayat Bhandara.

https://youtu.be/eM0PfvA4aMg

[Riaz Haq]

#Pakistan #agriculture #startup Tazah gets #2 million pre-seed funding. It screens produce for quality, removes rotten produce. It sorts into categories for specific types of buyers. Now it offers 5 products: ginger, garlic, tomatoes, potatoes & onions. https://tcrn.ch/3lgDm7C

The founders of Tazah Technologies, a B2B agriculture marketplace in Pakistan, met while serving leadership roles at Uber subsidiary Careem. Abrar Bajwa and Mohsin Zaka bonded during long working hours as the platform dealt with COVID-19’s impact. Eventually, the two started talking about creating their own startup. When asked how they got from ride-hailing to agri-tech, Bajwa told TechCrunch that the two grew up in farming communities. “We are from central Punjab and every family there has something to do with agriculture,” he said. “We had seen firsthand how farmers, or people who are involved in small holder farming, do not encounter social mobility based on how the deck is stacked against them.”

Agriculture is Pakistan’s biggest sector, contributing about 24% of its gross domestic product and employing half of its labor force, according to government statistics. But fragmented and complicated supply chains lead to inflated prices, food waste and low profits for farmers, all problems that Tazah wants to solve. The startup, which launched two months ago in Lahore, announced today it has raised a $2 million pre-seed round led by Global Founders Capital and Zayn Capital. Other participants included Ratio Ventures, Walled City Co, i2i Ventures, Suya Ventures, Globivest, Afropreneur Syndicate, +92 Ventures, Sunu Capital, Musha Investments and angel investors like senior executives from ride-hailing platforms Careem and Swvl, where Bajwa worked before launching Tazah.

There are currently about 300 small- to medium-sized sellers buying inventory through the platform and it moves multiple truckloads of produce per day. Right now it offers five main kinds of products: ginger, garlic, tomatoes, potatoes and onions. Tazah plans to expand into other vegetables and fruits, but wants to ensure that it can guarantee consistent supply and quality. For example, instead of just serving as a marketplace to connect farmer and buyers, Tazah also screens produce for quality, removing rotten produce. Then it sorts them into categories for specific types of buyers.

For example, potatoes are separated into ones for households, restaurants, small retailers, or to be made into French fries, based on what Bajwa and Zaka learned during market research. “We have spent months in wholesale markets, we’ve interviewed hundreds of retailers and we got to know that standardization of product is needed in Pakistan,” said Bajwa. “We get into the bottom of operations, because retailers will know what exactly is in the sack.” This has resulted in a monthly retention rate of more than 80%, and most customers buy from the platform about four times a week.

“We’re not just a box-moving operation because in one sack of potatoes, there can be multiple rotten potatoes, so you don’t want to just buy from farmers and then give to retailers. That doesn’t add a lot of value,” said Zaka. Tazah is currently focused on small to medium-sized sellers who are overlooked by fast-moving consumer goods and grocery product inventory providers because they aren’t able to buy at sufficient bulk. It’s also started talking to other customer segments, including B2C marketplaces, grocery apps and stores.

Increasing farmers’ profits and reducing food waste
Tazah’s founders say fragmented supply chains mean that about 30% to 40% of produce is wasted because they perish or are damaged each time they are unloaded, warehoused and reloaded onto a truck. The company wants to fix that by creating a shorter, more streamlined logistics infrastructure. It plans to keep costs down by working with third-party warehouse and trucking providers instead of owning its own facilities.

[Riaz Haq]

The business heads expressed keen interest to make investments in Pakistan in their respective domains and also briefed them about their companies. The president later witnessed the signing of three MoUs between Pakistan’s Special Technology Zones Authority with Mastercard, Galaxy racer (E-sports) and Shorooq Partners VC Funds.

https://nation.com.pk/10-Oct-2021/pakistan-offers-promising-busines...

President Dr Arif Alvi on Saturday inaugurated Pakistan Pavilion at Dubai Expo 2020. First lady Samina Alvi and Advisor on Commerce Abdul Razak Dawood were also present on the occasion. The president also visited different stalls of the pavilion where he was briefed about Pakistani products.

The president while meeting with heads of leading investment and technology firms in Dubai said that Pakistan is offering promising business opportunities to foreign investors through one-window operations in sectors of innovation and technology. The President said the one-window facility under Special Technology Zones

Authority is aimed at encouraging and facilitating the foreign investors to expand their information technology footprint in Pakistan.

He said the government has set up the STZA with a mandate to provide world-class digital and physical infrastructure across the country and put Pakistan on global technology radar. The President invited the companies to invest in Pakistan’s diverse sectors particularly in e-business. The business heads expressed keen interest to make investments in Pakistan in their respective domains and also briefed them about their companies. The president later witnessed the signing of three MoUs between Pakistan’s Special Technology Zones Authority with Mastercard, Galaxy racer (E-sports) and Shorooq Partners VC Funds.

[Riaz Haq]

#Netflix cuts prices in #Pakistan to grow #streaming business. The Standard plan now costs Rs 800 per month whereas the Premium plan is now priced at Rs 1,100. The plans were earlier, Rs 1500 and Rs 1200 respectively. #entertainment #movies #online https://tribune.com.pk/story/2324797/netflix-lowers-prices-in-pakistan

While Netflix recently hiked prices in NZ, Netherlands as well as Spain, the company has reduced prices in Pakistan

Last month Netflix announced it is launching a free mobile plan in Kenya as the global streaming giant hopes to bank on the 20 million internet users the country offers. The plan will allow users to sign up free of cost and includes ads.

Netflix has experimented with a different price offerings in different countries to attract customers, esp in developing nations. The mobile plans offered in India and Pakistan are one such example.