ISLAMABAD: Pakistan lies in the moderate digital development category with a cumulative Digital Development Index (DDI) of 0.205, says the United Nations Development Programme (UNDP).
The UNDP report, “Pakistan National Human Development Report (NHDR) 2023-2024 “Doing Digital for Development: Access, Adopt, Anticipate, Accelerate” launched here on Tuesday stated that Pakistan has a value of 0.399 on the Digital Adoption Index, performing poorly than most countries in the Middle East, Europe and Central Asia, Latin America, and the Caribbean but better than countries in Sub-Saharan Africa due to its poor human development outcomes – highlighting the country’s incapacity to fully benefit from the potential of digital transformation.
According to the Global Human Development Report, Pakistan has a low Human Development Index rank of 164 out of 193 countries, coupled with a Gender Inequality Index position of 135 out of 166 countries. Digital divides further exacerbate poor development outcomes.
Pakistan also ranks on all global digital indices and ranked at 45th out of 52 countries in the world internet development index.
The report has projected Pakistani retail market’s online share of e-commerce at $10 by2027.
Pakistan’s first-ever Digital Development Index (DDI) measures digital development progress across Pakistan’s provinces and districts, placing the country in the ‘moderate’ digital development category with a cumulative DDI of 0.205.
DDI value of Punjab (0.213), Sindh (0.209), Pakistan-Administered Kashmir (0.209), and Gilgit-Baltistan (0.207) show moderate levels of digital development. Khyber Pakhtunkhwa and Balochistan, with values of 0.196 and 0.135 respectively, lie in the low digital development category.
The Report shows a strong correlation between districts that perform better on digital transformation and those that have higher human development outcomes. For the first time in Pakistan, the NHDR 2023-2024 evaluates access to digital technologies in combination with other factors like digital usage, digital skills attainment, and transformative potential in the form of the DDI, which underscores how some districts have the highest transformative potential due to their high digital development.
The Report highlights that 54.3 per cent of the country does not have access to the internet because of inadequate digital infrastructure and affordability challenges. Almost half of Pakistan’s districts have low DDI rankings. Without equitable access to digital technology, Pakistan’s human development outcomes will remain low and under-served. With 87.35 million internet users and significant mobile connectivity, Pakistan's digital transformation opportunity presents an avenue for leapfrogging development barriers.
The report noted that the high subscription to mobile broadband in Pakistan is explained by low mobile data rates (some of the lowest in the world), but fixed broadband charges are unaffordable for most households. Internet-enabled devices also present an affordability challenge for the majority and constitutes the most significant barrier in smart phone penetration. Digital literacy is a ‘second-level’ barrier here - Pakistan ranks 98th on a global readiness scale. There are quality and connectivity challenges. Quality issues because high-capacity fiber optic cable networks have not been spread widely across the country. Last mile network deployment is uneven, frequently taken over by private actors in major urban centers, and next to no deployment in second or third tier cities.
Access to desktop computers, laptops and tablets in Pakistan has a low national average of 11.75 per cent, slightly higher across urban contexts by 19.42 per cent, but lower in rural areas by 6.92 per cent.
The NHDR survey finds significant growth of the e-commerce sector in Pakistan, whose predicted revenue was above $8 billion in 2023, making it the 36th largest market for e-commerce. The NHDR survey finds that the landscape of cryptocurrency adoption is intricate, with only a modest 3.9 per cent of respondents demonstrating confidence in their understanding of cryptocurrencies. A substantial 82.1 per cent remain oblivious to this emerging technology.
In Pakistan, the adoption of digital financial tools has occurred largely through the widespread use of mobile wallets. This is readily apparent in the fact that out of the 39.4 per cent of survey respondents who said they use online banking or mobile wallets, 98.2 per cent confirmed that they use mobile wallets as either a primary or secondary account. The affordability of mobile devices is a major challenge for almost half the population.
However, the report noted that despite endogenous issues (stunted economy, low human development, difficult governance landscape, etc), as well as exogenous issues (global climate change, global pandemic, etc), Pakistan's digital transformation presents an avenue for leapfrogging development barriers. There is a very strong correlation between internet availability and people’s usage of digital means to advance learning, health, and living standards.
The report identifies four critical enablers to transform Pakistan’s major development sectors: a) Policy Reform; b) Innovation; c) Investments; and d) Digital Capabilities. The report’s theory of change: If Pakistan enables digital capabilities, innovation, investments, and policy reform across prioritised sectors, then, it will achieve improved outcomes in digital access, infrastructure, rights, governance, job creation, growth and resilience, which will accumulate to improve and enhance the country’s human development indicators and HDI ranking.
By closing internet services in the country, businesses face a direct loss of Rs1.3 billion or 0.57 per cent of GDP per day. These include the economic costs of the closure of internet services for the telecommunication sector of around half a billion rupees, while for the financial sector, it is a loss of almost a quarter of a billion rupees.
Major challenges persist that need concerted attention before digital acceleration can be achieved: Outdated legislation, data privacy and security and lack of comprehensive e-commerce regulation and insufficient legislations for digital payments. To overcome these challenges, the report recommends measures: The government needs to develop policies on data privacy and cyber security that do not constrain data flow, and encourage trade, innovation and e-commerce. Innovation and entrepreneurship should be the cornerstones of Pakistan’s economic and financial policies. Exporters should expand their market outreach through digital means.
The NHDR survey found that 53.5per cent women in Pakistan state their spouse decides whether they should own a phone, whereas another 30per cent say it is their parents or guardians who make that decision for them. This is in stark contrast to 77per cent men who say it is their own decision.
Federal Minister Ahsan Iqbal was the chief guest at the launch ceremony, which was also attended by visiting UN assistant secretary-general, UNDP Assistant Administrator and Regional Director Regional for Asia and the Pacific, Kanni Wignaraja.
“The Government of Pakistan is committed to harnessing the benefits of technological innovation to improve livelihood prospects, accelerate financial inclusion, improve employment, and deliver efficient public services,” said Ahsan Iqbal.
He said the digital revolution is reshaping societies worldwide, and Pakistan is poised to emerge as a frontrunner in this transformative journey.
As Chairman of the Report Advisory Council, he highlighted the significant impact of the report's findings on government initiatives, including the ongoing upliftment efforts in 20 of Pakistan's most impoverished districts, guided by the multidimensional poverty index introduced in the inaugural UNDP report of 2018. Additionally, he emphasized the value of the Youth Development Index in understanding and addressing the aspirations and concerns of Pakistani youth.
Iqbal emphasized the government's responsibility to bridge the digital divide across all regions. He underscored the transformative potential of this year's UNDP report, which sheds light on critical aspects of development, including digital inclusion.
To bolster Pakistan's readiness for the digital age, the government has established National Centers of Excellence in key universities nationwide, fostering innovation in areas such as artificial intelligence, cyber security, big data, and cloud computing.
Iqbal highlighted key initiatives that have propelled Pakistan's digital development journey. These include the deregulation of the telecommunications industry in 1993, paving the way for a telecommunications revolution, and the introduction of 3G/4G licenses in 2013. Furthermore, he underscored the significance of Pakistan's first digital policy in 2021 as a landmark in the nation's digital transformation.
Addressing the imperative of adapting to change, Iqbal outlined proactive strategies for embracing digital transformation, emphasizing the importance of anticipating and embracing change rather than succumbing to it.
Highlighting the widening gap between socioeconomic segments in the digital era, Iqbal emphasized the urgency of addressing this disparity.
Iqbal urged a forward-looking approach, setting sights on Pakistan's future growth trajectory. He emphasized the need for sustained growth rates of seven per cent to nine per cent to propel Pakistan towards becoming a $2 trillion or $3 trillion economy by 2047, respectively. Pakistan is poised to be among the top 20 economy by 2030.
Kanni Wignaraja observed that just over 60 per cent of the population in Asia-Pacific is online, with women and marginalised groups significantly underrepresented. “Pakistan is the 6th largest contributor to the global middle-class growth between 2022 to 2030, contributing 25 million,” she said. “Targeted digital transformation efforts for this growing middle class could greatly improve the country's productivity.”
“By launching this report, our ambition is to contribute to a future-oriented Pakistan where digital transformation becomes a hallmark of its inclusion, and a cornerstone for its prosperity,” said UNDP Pakistan Resident Representative Dr Samuel Rizk on the occasion.
Copyright Business Recorder, 2024
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