- Projected to reach Rs40 billion by 2025, e-commerce is Pakistan’s new frontier for economic growth
- Digitalisation brings unprecedented income growth for women, with earnings nearly nine times the national average
Pakistan is undergoing a digital transformation like the rest of the world, owing to the emergence of cutting-edge technologies that have made digital strides possible within the country and beyond.
This transformation in recent years, is driven by the government’s visionary Digital Pakistan initiative, launched in 2019 (Digital Pakistan Policy, 2019). This comprehensive strategy aims to employ technology for economic growth, improved governance, and enhanced citizen engagement.
As of 2024, Pakistan’s digital economy has shown massive growth, with the information technology (IT) sector contributing 1.4% to the country’s GDP, valued at PKR 1.1 trillion (approximately USD 3.7 billion), as reported by the Pakistan Telecommunication Authority’s (PTA) Annual Report 2023-24.
Add to it the fact that the country’s tech exports have surged by 40% in the last fiscal year, reaching USD 2.2 billion, according to the State Bank of Pakistan (SBP) Annual Report 2023-24.
Furthermore, Pakistan’s e-commerce market is projected to reach PKR 40 billion (approximately USD 137 million) by 2025, growing at a compound annual growth rate (CAGR) of 25%, as stated in the Pakistan E-Commerce Association (PECA) and World Bank Report (2024)
With over 120 million mobile subscribers, as per PTA’s 2024 data and 90 million internet users, according to Internet Live Stats (2024), Pakistan’s digital penetration has reached 55% of the population, as reported by the World Bank (2024).
Despite these gains, challenges persist, including infrastructure gaps, digital literacy, cybersecurity concerns, and regulatory frameworks.
Though, Pakistan’s potential and promise to surmount these obstacles hindering its digital ascent can’t be undermined in times to come.
Pakistan’s digitalisation journey has been remarkable, particularly in the workforce. “Digitalisation is changing business models, providing new revenue streams, and enhancing value-producing opportunities,” notes the Chartered Institute of Management in its report, “Digitalisation – Pakistan’s Vision 2025.”
The Digital Pakistan Policy highlights the country’s tremendous progress, ranking fourth globally in freelance development, with a 70% increase in IT exports over the past three years.
According to the State Bank of Pakistan’s Annual Report 2023-24, the services sector has witnessed enormous growth, with income levels 129.1% higher than the national average. Women, in particular, have benefited, with incomes nearly nine times the national average, as reported by the World Bank in its 2024 study, “Pakistan’s Digital Economy.”
Research by the Pakistan Telecommunication Authority (PTA) reveals that the country’s IT services exports have grown at 10.8% per annum since 2010, reaching $1.23 billion in 2019.
The Ministry of Commerce’s E-Commerce Policy Framework emphasises the exponential growth of global e-commerce, with sales reaching $29 trillion in 2017.
“Pakistan’s digital miracle has created new opportunities for entrepreneurs, freelancers, and small businesses,” says Dr. Umar Saif, founder of the National Information Technology Board As Pakistan continues to leverage digital technologies, its workforce is poised for continued growth and a rise unparalleled.
But not all is rosy, as the problems marring this rise are also too strong to be overlooked.
Some of these challenges have also been pointed out by various forums.
For instance,”Digital infrastructure gaps, particularly in rural areas, hinder access to online services,” notes the World Bank in its 2024 report, “Pakistan’s Digital Economy” .
Secondly, Pakistan Telecommunication Authority (PTA) data reveals that only 55% of the population has internet access, with rural areas lagging behind. Thirdly, cybersecurity concerns persist, with Pakistan ranking 46th globally, according to the Global Cybersecurity Index (GCI).
Fourthly, “Digital literacy is a major obstacle, with 70% of Pakistan’s population lacking basic digital skills,” says Dr. Umar Saif, founder of the National Information Technology Board.
Fifthly Payment systems and logistics also require enhancement, as cash-on-delivery (COD) dominates e-commerce transactions, highlighted by the Pakistan E-Commerce Association.
Sixthly, Pakistan’s digital economy faces fragmentation, with multiple regulatory bodies overlapping, notes the Ministry of Commerce’s E-Commerce Policy Framework.
Multiple forums have proposed feasible and easy-to-implement solutions to defeat these bottlenecks in Pakistan’s quest to become digitalised.
For instance,” Investing in digital infrastructure, particularly in rural areas, is crucial for inclusive growth,” says the World Bank in its 2024 report, “Pakistan’s Digital Economy”.
Also Enhancing cybersecurity is also vital, with the Global Cybersecurity Index (GCI) recommending capacity building and international cooperation.
The Pakistan E-Commerce Association advocates for the development of secure payment systems, reducing reliance on cash-on-delivery (COD).
To add more strength “Skills development programs and entrepreneurship support are essential for fostering a vibrant digital ecosystem,” emphasises the Ministry of Commerce’s E-Commerce Policy Framework.
Dr. Shahid Qureshi, former Chairman of the Pakistan Telecommunication Authority, suggests leveraging public-private partnerships to drive digital transformation.
Additionally, experts stress the importance of data protection laws and intellectual property rights.
“A coordinated effort between government, private sector, and civil society is necessary for Pakistan’s digital success,” says Jehan Ara, President of the Pakistan Software Houses Association.
The State Bank of Pakistan recommends promoting digital financial inclusion through innovative solutions. Furthermore, experts propose addressing the issue of overlapping regulatory bodies to streamline governance. “Effective regulation can stimulate innovation and growth in Pakistan’s digital economy,” asserts the Asian Development Bank in its 2022 report.
The aforementioned solution realistically pinpoints the problems haunting Pakistan’s e-commerce, which undoubtedly, ranks as an emperor of the future.
Countries comparable to Pakistan, such as Indonesia, Bangladesh, and Kenya, have successfully overcome e-commerce challenges, offering valuable lessons.
According to the World Economic Forum’s 2024 Global Digital Economy Report, Indonesia’s e-commerce market grew by 23% in 2023, driven by investments in digital infrastructure and partnerships with private sector players.
Bangladesh’s “Digital Bangladesh” initiative has enhanced digital literacy, with 80% of the population now having access to digital financial services, according to the Asian Development Bank’s 2024 study.
Kenya’s innovation hubs have fostered entrepreneurship, with the country ranking 3rd in Africa for start-up funding, according to the 2024 Africa Startup Ecosystem Report.
Pakistan can learn from these countries by adopting similar strategies, Pakistan can unlock its e-commerce potential and take it to the next level.
At the end, Pakistan’s e-commerce and digitalisation journey has shown promising growth, despite challenges. With a potential market of 200 million people, Pakistan is poised for significant expansion. To harness the ultimate potential and render its benefits, Pakistan must address infrastructure gaps, enhance digital literacy, and foster innovation.
By learning from comparable countries and implementing effective strategies, Pakistan can unlock its digital potential, drive economic growth, and become a key player in the global digital economy.