Pakistan forms $10mn fund for startups

Federal Minister for IT and Telecom Shaza Fatima Khawaja on Friday announced a $10 million fund under the second phase of the Pakistan Startup Fund (PSF), as she met senior officials of the State Bank of Pakistan (SBP) and the Sindh government in the day to discuss measures to strengthen the country’s startup ecosystem and accelerate digitalisation of the national economy.

Speaking at the Fintech Roundtable 2026 held at the Sindh Governor House, she said the government was working to increase funding available to startups under the PSF to $25–50 million over the next few years by bringing global financial institutions, including the World Bank, IFC and the Asian Development Bank, on board.

She said the government had 100% digitalised G2G [government-to-government] payments among the federal ministries and departments. “So, there is a large movement towards the whole economy going cashless,” she said.

The minister said the government was targeting to increase size of the formal economy through digitalisation. “If we formalise 25% of the informal economy, that’s about $100 billion added to Pakistan’s national GDP, which is a huge number,” she said.

Elaborating the agenda of her visit to Karachi on Friday, the federal minister said, “We are here with the whole team in Karachi is because we met with the Governor State Bank and Chief Minister earlier in the day to move digitisation forward as a whole and as a nation”.

She said access to capital had remained a major challenge in recent years, particularly after the global funding slowdown in 2021, which severely constrained financing for Pakistani startups.

“But, we are starting a Pakistan Startup Fund. The phase one deployment has already started. In Pakistan Startup Fund 2.0, we’ve set a $10 million fund.

“We have almost finalised our conversation with the World Bank. IFC is pitching in. We’re also talking to ADB.”

The minister further said the idea was to anchor a larger fund, make it a first-class guarantee for international investors, hand it over to an international fund manager through an RFP (Request for Proposal) process.

“So, we’re in quite some advanced stages to make sure that at least anywhere between a $25 million to $50 million fund is available for the startup ecosystem for the next few years.”

Pakistan’s formal economy stands at $400 billion at present, according to Shaza Fatima Khawaja.

“Conservative numbers show that almost 50% of the economy is informal, which means that there might be another $400 billion in the economy which is not documented. As we digitise the economy, without any additional revenue measures, enforcement, taxation, our economy will be formalised. If we formalise 25% of the informal economy, that’s about $100 billion added to Pakistan’s national GDP, which is a huge number.”

Giving a talk on digitalising Benazir Income Support Programme (BISP) payments, she said around 825,000 women had created digital wallets.

“We distributed 10 million free SIMs and opened digital wallets. So, today, the transactions have gone into trillions [of rupees via digital channels], when we talk about only the BISP beneficiaries.

“So, not only did they receive the payments, but they started doing their utility payments, their rents, their children’s expenses, and other transactions [digitally]. They started using those wallets properly,” she said.