The power of mobile to accelerate digital transformation in Pakistan Copyright © 2019 GSM Association The GSMA represents the interests of mobile GSMA Intelligence is the definitive source of global operators worldwide, uniting more than 750 mobile operator data, analysis and forecasts, and operators with over 350 companies in the broader publisher of authoritative industry reports and mobile ecosystem, including handset and device research. Our data covers every operator group, makers, software companies, equipment providers network and MVNO in every country worldwide and internet companies, as well as organisations in – from Afghanistan to Zimbabwe. It is the most adjacent industry sectors. The GSMA also produces accurate and complete set of industry metrics the industry-leading MWC events held annually in available, comprising tens of millions of individual Barcelona, Los Angeles and Shanghai, as well as the data points, updated daily. Mobile 360 Series of regional conferences. GSMA Intelligence is relied on by leading operators, For more information, please visit the GSMA vendors, regulators, financial institutions and corporate website at www.gsma.com third-party industry players, to support strategic decision-making and long-term investment Follow the GSMA on Twitter: @GSMA planning. The data is used as an industry reference point and is frequently cited by the media and by the industry itself. Our team of analysts and experts produce regular thought-leading research reports across a range of industry topics. www.gsmaintelligence.com [email protected] This report was authored by Kenechi Okeleke, Lead Analyst THE POWER OF MOBILE TO ACCELERATE DIGITAL TRANSFORMATION IN PAKISTAN CONTENTS Executive summary 4 1. Pakistan: Government socioeconomic aspirations in context 8 2. Digital transformation in Pakistan and the role of mobile technology 12 2.1 Digital transformation initiatives 12 2.2 Mobile technology – a key enabler of digital transformation 15 2.2.1 Connectivity 15 2.2.2 Digital financial services 18 2.2.3 Tech innovation 20 3. Mobile technology contribution to social and economic progress in Pakistan 25 3.1 Contribution to economic growth 25 3.2 Contribution to national development aspirations in Pakistan 28 3.3 Assessing the impact of mobile across key sectors in Pakistan 30 4. Opportunities ahead to accelerate the impact of mobile-enabled digital transformation on socioeconomic progress 43 4.1 Enhance digital and financial inclusion 46 4.2 A holistic approach to digitisation 52 4.3 Leveraging mobile technology in implementing national development plans 53 3 THE POWER OF MOBILE TO ACCELERATE DIGITAL TRANSFORMATION IN PAKISTAN Executive summary Pakistan is on a national development journey, rooted in the government’s commitment to national and global development goals. Several of these, including the UN Sustainable Development Goals (SDGs), will conclude by the end of the next decade. This underlines the urgent need for the government and other stakeholders to accelerate social and economic development in the country. In recent years, digital technologies have become registration initiatives, digital health solutions and vital tools to drive social development and economic digital learning platforms in the country. For example, growth in Pakistan. Digital transformation is underway mobile-enabled branchless banking services have in the country, with government and public institutions grown significantly over the last decade, reaching 47.2 as well as private and development organisations using million registered accounts as of December 2018, while digital platforms to increase engagement and improve digital birth registration has recorded 740,000 children service delivery to citizens. In recognition of the impact since 2017. of digital technologies, the government’s digital policy aims to transform Pakistan into a knowledge- Mobile’s role in growth and development based economy, while the planned National Digital Transformation Initiative aims to encourage a more The mobile ecosystem in Pakistan plays an increasingly consistent approach to the use of digital technologies important role in economic growth, through its direct to deliver good governance. contribution to GDP and through driving productivity and efficiency gains across different sectors of the Mobile at the centre of transformation economy. In 2018, the total value added generated by mobile operators alone – taking into account direct, Mobile technology is at the heart of digital indirect and productivity effects – was around $16.7 transformation in Pakistan. At a foundational level, billion, equivalent to 5.4% of GDP. Mobile operators it is the bedrock of fast, reliable and affordable and the ecosystem also provided direct employment connectivity. Mobile broadband networks now cover to around 320,000 people in Pakistan in 2018, while 80% of the population, and 97% of internet connections economic activity in the mobile ecosystem continues to are based on mobile connectivity. Mobile technology is generate jobs in other sectors. also enabling the application of the Internet of Things (IoT) across areas including agriculture, clean energy Despite this progress, Pakistan still has much to do to and safe water solutions. Pakistan has nearly 700,000 realise its development aspirations. The country lags cellular IoT connections. behind many of its neighbours in South Asia on several key human development indicators (HDIs), including Beyond connectivity, mobile services such as education, health and gender equality. Meanwhile, messaging and mobile money are enabling the rapid population growth – at nearly double the average effective and efficient delivery of life-enhancing for South Asia – could increase the pressure on existing services to individuals and communities across infrastructure and services, and undermine efforts to Pakistan. Today, mobile technology is the primary enhance social development. channel for digital financial services, digital birth 4 THE POWER OF MOBILE TO ACCELERATE DIGITAL TRANSFORMATION IN PAKISTAN 55 THE POWER OF MOBILE TO ACCELERATE DIGITAL TRANSFORMATION IN PAKISTAN A call for further collaboration To fully realise the opportunity mobile technology increase access to mobile connectivity and accelerate presents to achieve Pakistan’s national development its impact on the lives of individuals and communities. aspirations, there is a need for key stakeholders on the country’s development journey (government, the We have identified three distinct but interrelated development community, civil society organisations, actions for stakeholders to enhance the impact of the mobile ecosystem and the private sector) to mobile-enabled digital transformation on Pakistan’s collaborate on key initiatives and actions that can development aspirations. See Figure 1. Figure 1 Key actions for stakeholders to enhance the impact of mobile-enabled digital transformation Leverage mobile platforms for national development plans Take a holistic approach to digitisation Enhance digital and financial inclusion 6 THE POWER OF MOBILE TO ACCELERATE DIGITAL TRANSFORMATION IN PAKISTAN • Enhance digital and financial inclusion: The agencies and development organisations and majority of Pakistan’s population still do not donors often leads to wastage and inefficiency use mobile internet or have access to formal in the use of resources. A whole-of-government financial services, putting them at risk of missing approach to the planning and implementation of out on the socioeconomic benefits of digital digital initiatives could facilitate interoperability transformation. The exclusion gap cuts across of digital services for citizens and increase their gender, geographic, economic and literacy overall impact on society. lines. For example, women are 37% less likely than men to own a mobile phone in Pakistan. • Leverage mobile platforms for national Addressing the access and usage challenge to development plans: Pakistan’s 12th Five-Year these services is essential to maximising the Development Plan will run from 2019 to 2024. impact of mobile-enabled digital transformation There is a significant opportunity to incorporate in Pakistan. mobile technology into the implementation of the plan, particularly on efforts to improve key HDIs, • Take a holistic approach to digitisation: The such as gender equality, health, education and fragmentation of digital services by government poverty reduction. 7 THE POWER OF MOBILE TO ACCELERATE DIGITAL TRANSFORMATION IN PAKISTAN 1. Pakistan: Government socioeconomic aspirations in context The next decade will represent a pivotal stage in Pakistan’s national development journey. During this period, the Pakistan Vision 20251 aspiration and efforts to achieve the UN Sustainable Development Goals2 (SDGs) will reach a conclusion. The government of Pakistan will also be implementing a number of medium-term development plans, including the 12th Five-Year Plan and the Pakistan One United Nations Programme III (OP III)3 in the first half of the decade. Pakistan has seen some improvement in key social as access to water, energy and sanitation, are also and economic indicators in recent years. The economy marked by stark urban-rural disparities. Given that grew at an average rate of 5% between 2013 and 20174 two-thirds of the population live in areas where the on robust private consumption, rising investment socioeconomic challenges are particularly acute, (especially in energy and infrastructure projects around Pakistan lags many of