Pakistan’s Digital Divide - Part 1

Why hasn’t the government realized its dream of a futuristic Pakistan?

The recent events within the space of Pakistan’s technological movement called for a thorough analysis of where we are in the race towards Digitization. This essay is divided into two parts. In the first, I provide my perspective on the origins of tech in Pakistan and India, its role in achieving globalization and each region’s response to emerging tech such as AI and online media. The second part will cover the state of financial inclusion in Pakistan and where we are today.
Note: I have tried to keep the essay digestible enough without diving too much into details

On how tech in India and Pakistan evolved, a short history

July of 13th saw the 6th edition of Google for India initiative unfold, this time virtually due to the health speculations brought by Corona Virus. CEO Sundar Pichai; optimistic as ever, announced to invest $10 billion in the efforts to accelerate India’s Digital economy¹. This amount of money will open avenues for upstarts and growth-stage startups to reach a much wider audience physically or on the web.

India is a developing economy but is far ahead than most. If we consider how they were able to expand themselves into a tech giant, two reasons come to mind– one being the obvious one: population. Larger population means greater pool of talent. To give context of size, Pakistan stands at 6.24:1 ratio wise in terms of population. The other reason is that cohorts in the late ‘80s who were pursuing a STEM degree either in Computer Science, Mathematics or some form of engineering were smart to identify opportunities in the West, and made a head start in a career in tech through the software export industry².

Through continuous engagements with India, corporate America thought that expanding their business in India amidst the dot-com bubble would be akin to striking a gold mine: access to cheap labor and access to the global market. A win-win situation for both nations. Consequently, Amazon, IBM, Citibank and Google all opened regional offices and attracted the most intelligent minds to work there. “Globalization” paved the way for prospective undergraduates in top Indian institutes to shape their career - get hired in the local office, work for a few years and make the shift to the States through a company’s relocation package.

A few years after Y2K and the dot-com bust, India was able to recover the shortfall in economy. The South-Asian tech community grew exponentially as they integrated into Silicon Valley culture, securing solid positions in engineering and research while seasoned members would find themselves in executive level positions. Having achieved enough stability, they could afford to give back to their country of birth, case in point: Sundar Pichai.

In 2020, major tech companies have CEOs who have their birthplace in India – Satya Nadella (Microsoft), Apoorva Metha (Instacart), Arvin Krishna (IBM), Mohit Aron (Cohesity), Shantanu Narayan (Adobe) to name a few.

Pakistan does not have such a storied account of how technology paved the way to such a massive economic success. We are known to be one of the most difficult places to do business, as World Bank ranks Pakistan at 108 among 190 countries³ compared to India which is ranked at 63. Even in 2020, our internet fiber optics are broken, and electricity providers cut the cord to power in protest apart from being a limited commodity. E-commerce apps do not support versatile payment options and are astonishingly slow in delivering the shopped goods to customers. The same narrative can be applied to online food delivery services.

The story of web 2.0 in Pakistan has been marred with internet censorship. Institutions did not know how to handle technology, especially the internet given the diversity of information it brought with it. Instead of defining clear laws on data protection and internet compliance, PTA would directly go on to ban Facebook, YouTube and Twitter on grounds of either religious or anti-state content⁴.

Since 2011, the same institute has been cracking down on virtual private networks (VPNs) and pushing companies to get them registered to avoid getting legal notice⁵. All these activities have been red flags for SV companies to engage further in investing into Pakistan. This is the digital divide that I speak of. A series of regressive decision making, and blanket statements around ‘progress’ have led to a weak digital infrastructure in place.

However, there have been entrepreneurs who ventured into the software export business although being slightly late in the game compared to India who already were in a good working relation with the United States. There are a limited number of success stories that do exist, but most are obscure at best due to lack of news coverage or personal preference.

From the early 2000s, I can think of Zia Chishti, a young entrepreneur who started The Resource Group (TRG) as a rebrand of his earlier venture, Invisalign. Since then he also started Afiniti; a call-center optimization solution, which is among the few AI-driven companies in Pakistan and considered the first to reach ‘unicorn’ ($1 billion) status.

Similarly, NetSol also emerged as a leader in enterprise leasing technology, under the vision of the Ghauri brothers. Their story spans 30 years of successful deals and delivery of projects to automotive giants based in UK, USA, and China. All the effort culminated in the company going public on the NASDAQ stock exchange, the first Pakistani company to achieve such a milestone.

For the Pakistanis who pursued greener pastures in tech in the US would not find themselves in the same level playing field especially when it came to becoming members of the board. It was visibly apparent that preference would be given to someone from India who by this time were fully integrated in SV tech culture. In this situation, the prospective Pakistani ideally find themselves in a situation to look for a new gig, either becoming community leaders on social media forum or returning back to their motherland to start a new venture or serve as consultants for government initiatives. All in the efforts to ‘give back’ and create impact.

These are a small set of people, however. We need fresh new faces who will be part of the next wave of change and gladly the past few years have shown that we are heading in that direction.


On Digital Pakistan

Speaking of government initiatives, we can talk about the Digital Pakistan movement that kicked off last year. The Prime Minister of Pakistan formed a steering committee led by ex-Google Tania Aidrus to engage the government and private sector in transforming the digital infrastructure of the country. Part of the manifesto was to make strides in digital literacy, promoting entrepreneurship and improving financial inclusion.

Following the announcement, the initiative picked up a lot of hype and brought hope of a brighter future for Pakistan’s digital economy. Since their inception, the task force has struggled with institutional, legal and technological challenges. To top it off, the Corona Virus pandemic basically killed their momentum considering it brought several of their projects to a halt.

The problem of government-led initiatives has been that not enough resources get allocated to teams, so they have to make do with what they have. Constant tug-of-wars and unrealistic expectations lead to solutions that simply do not scale. At the end, that project either gets dropped or transferred to a different team altogether for them to pick up the pieces.

The AI-initiative is also another promise that has not been fulfilled. The president has personally invested hours into building traction for the project, but nothing has materialized to this date. We lack the servers that power the computation requirements for such applications. We do not have the required tools and manufacturing skill to create internet of things devices, let along push them to market.

What will help the movement is to look towards its own talent pool of developers, designers and data scientists. Hire new grads and trust them that they will do a solid job with less interference and more encouragement. They are equally aware about the situation of tech and they believe in being part of the bigger picture as well.

On that note, what we need is visionary who believes in the power of social and economic impact that comes with the mobilization of tech and startups, sort of like SV gurus Reid Hoffman or Paul Graham of YC, both thoughtful leaders and super nice guys in real life. As the Pakistani tech diaspora slowly make their return, they have a big role to play in bridging the digital gap. That will happen when the government gives them the freedom to actively participate within the tech ecosystem and let them create meaningful change where it matters.


Footnotes

[1] Official announcement of the Google for India initiative: https://blog.google/inside-google/company-announcements/investing-in-indias-digital-future/

[2] Mini documentary on the rise of India’s tech: https://www.youtube.com/watch?v=YHVNWtBuDVk&t

[3] World Bank Report -Ease of Doing Business 2020: https://www.worldbank.org/en/news/press-release/2019/10/24/doing-business-2020-accelerated-business-climate-reform-agenda-puts-pakistan-among-top-10-improvers

[4] NYT’s report on Pakistan’s internet censorship: https://www.nytimes.com/2020/02/27/technology/pakistan-internet-censorship.html

[5] PTA’s warning of banning VPN: https://www.dawn.com/news/1563843

[6] A link to the Manifesto: https://twitter.com/taidrus/status/1229457053871112193