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February 23, 2021

Connecting the digital dots


February 23, 2021

This month marks the mid-term of the current National Assembly, which took oath on August 13, 2018. Prime Minister Imran Khan took the oath of the highest office in the land on August 18, 2018.

Regardless of how we measure the term of the PTI coalition that won the right to govern in the 2018 general election, it has passed the midway mark. We are now closer to the next general election in Pakistan than we are to the previous one.

One of the lessons PM Khan may have learnt in the first half of his term is that all the top-down power in the world can’t fix a system that is broken at the very basic levels. This is why, despite relatively strong support among the urban youth, an historic alignment with the military leadership, and provincial governments in three of the four provinces, the PTI has found it difficult to convert its ideas and energies into effective public policy. Few better examples of this exist than the wide expanse of public policy that broadly falls into the category of digitalization.

First, the good news. In recent weeks, the State Bank of Pakistan and the Securities and Exchange Commission of Pakistan have announced bold new initiatives to help catalyse the digital financial services and the wider technology startups space. Roshan Digital Accounts, the Raast payments system, and regulatory reforms that enable the movement of capital to serve as investment fuel for Pakistani firms are all important changes that reflect the clear purpose with which the government is moving forward: digital transformation, especially in the economy. Advocates for these changes have spent years arguing the case for improved public sector and regulatory treatment. It is to the credit of the State Bank governor, the SECP leadership and PM Khan that these changes are taking place.

Now, the less good news. Notwithstanding previous governments’ failures (and successes) on digitalization, a lot of time and talent has been wasted in the past two and a half years. To achieve any kind of forward motion on key decisions, agents of change in government have to innovate and manoeuvre in ways that they should not have to.

Pakistan’s e-commerce policy, a long-standing draft document that became a dead horse at the Ministry of Information Technology, was resurrected by the Ministry of Commerce. The head of an important public sector organization in the digital space was hired a few weeks prior to the appointment of a digital czar. For months, even members of the cabinet did not know whether the czar was in charge, or the chief executive. Tragically, the MQM Pakistan was awarded the IT ministry – not because the MQM is brimming with party workers that are the second coming of Elon Musk, but for reasons that have nothing to do with technology.

Social media rules meant to help protect Pakistanis from the individual and collective dangers posed to users of social media ended up becoming worldwide news, diminishing Pakistan’s standing as a country with predictable and defensible public policy. Why? Because the approach to changes sought in public policy is one borne of fear and defensiveness, instead of confidence and competence. The cultural wars in the country are nowhere nearly as stark and binary as they are made to be when the executive, including regulatory functions, and the judiciary, begin to react to the threat of the mob, instead of the norms of the constitution, and the bounds of reason.

Combine the good news and the less good news, and add the Covid-19 pandemic to the mix. What do we get? Some surprising things and others less surprising.

For one, data usage via mobile phone increased by 77 percent year on year, from 2019 to 2020. Mobile banking increased by a full 100 percent. E-commerce increased by 56 percent. These are impressive numbers. Fuelled in part by necessity, and in part by the capacity of the telecom sector to respond to a heightened demand.

But there are structural challenges in how these massive increases are distributed across the country. Nationwide, nearly 65 percent of all men own a mobile phone. The corresponding number for women is 26 percent. Internet usage in Pakistani cities is 51 percent, but in villages, only 24 percent. Men and women in Balochistan and in other areas of the country that are considered ‘remote’ are at a distinct disadvantage, despite digital access being a silver bullet for so many of them.

Telecom operators that engaged in price wars in the early 2000s, soon after the calling party pays (CPP) regime was instituted, continue to suffer from the low average revenue per user disease that has plagued Pakistan’s telcos permanently since. Still, with a population boom that will last well into the 2040s, growth is almost guaranteed – for them, and for the wider ecosystem in digital and tech. The question is whether this growth will be rapid and high, or slow and unpredictable. This is where government coherence comes in.

The wider exercise of generating public policy in Pakistan is irreparably broken. That the State Bank or the SECP or Ministry of Commerce can generate new ideas and execute them is the anomaly, not the product of predictable, linear or transparent processes. This method of generating public policy brings with it great risks. The only risk-mitigating instrument the state seems to have developed in nearly 70 years is the National Accountability Bureau. Domestic and foreign investors don’t have the same compulsions as Pakistani politicians. They can simply exit the noise and make money in better places with greater security for themselves and their money.

If the basic interactions and relationships between key cogs in the system are malfunctioning, or worse are ill defined to begin with, then such a system will generate failure, by default. There is a difference between entry level individuals responsible for functions that keep a system running and senior managers responsible for using operations data to monitor, course correct and re-design inputs. If the operations level doesn’t do its job, the managers can’t do theirs. But the responsibility for the operations level not doing its job is the managers’. In such infinite loops, if a system allows for a lack of accountability to become normalized, that system is condemned to failure.

Covid-19 has demonstrated how digital connectivity can fuel human interaction, financial transactions and basic societal and economic functionality. Yet it took over a month after the pandemic emergency for the government to declare telecommunications as an “essential service”. Many connectivity challenges in the early days of the pandemic lockdown could have been avoided by simply making that call sooner.

The role that the military and civilian leadership imagine for Pakistan, in the region, and around the world, is that of connective tissue. Pakistan, as an enabler of prosperity for its own people, the people of Afghanistan, the wider populace of Central Asia and beyond. This is exactly what China has already invested in through CPEC, and what the American leadership may be persuaded to invest in during the Biden Administration. This is a good vision for Pakistan. It is grand and it places people at the heart of economic growth – not through paranoia and guns and tanks, but through trade and commerce and connectivity.

The big question is whether a vision for such connectivity can be complete if Pakistanis themselves are left to check whether they have enough bars on their mobile phone signals, or worse if they are left without mobile phones. Connecting the grand vision for Pakistani security and economic growth with the domestic digitalization agenda is a function of national leadership – not a bureaucratic or technocratic one.

The writer is an analyst and commentator.