KARACHI:
In a bid to transform Pakistan into a thriving tech export hub, the Caretaker Federal IT and Telecommunication Minister, Dr Umar Saif, is spearheading an ambitious plan aimed at generating $10 billion in annual tech exports. The strategy hinges on enabling one million freelancers to earn $30 each daily, with the government providing the necessary funding and co-working spaces within the next two to three months.
In addition to this ambitious initiative, Pakistan is also in talks with the renowned digital payment platform, PayPal, with expectations of a positive response in approximately one month, which would facilitate the connection of PayPal with Pakistan’s banking system. This connection would streamline export proceeds for IT professionals and others.
Furthermore, the interim government has set an aggressive target to launch advanced mobile internet 5G within eight months, potentially by June-July 2024. Government officials are diligently working on this project and anticipate finalising preparations for the 5G auction process, which will be continued by the newly elected government.
These announcements were made by Saif during an event at Habib Bank Limited (HBL) where a memorandum of understanding (MoU) was signed between HBL and the Pakistan Software Houses Association (P@SHA). This multi-year partnership is focused on positioning Pakistan as a global tech destination, recognising the IT industry as a key driver of economic growth and job creation.
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Saif revealed that the government has allocated nearly Rs2 billion to establish the Pakistan Startup Fund, and they have secured agreements with venture capitalists to contribute an additional Rs8 billion through Series ‘A’ financing. Moreover, co-working spaces will be created to accommodate around half a million IT freelancers.
The realisation of these initiatives is slated for the next two to three months, aiming to empower one million freelancers to earn $30 per day.
Pakistan’s current IT exports stand at approximately $2.5 billion annually, but the actual figure could range between $3.5-4.5 billion annually. The disparity arises from many companies repatriating a substantial portion of their earnings outside the country. This gap is expected to narrow after recent government measures allowed IT professionals and freelancers to retain up to 50% of their earnings in foreign currency accounts within Pakistan, up from the previous limit of 35%.
Saif explained, “If a venture capital firm engages with the Pakistan Startup Fund (PSF), they would only need to invest $800,000 (80% of the total project cost), while the remaining $200,000 in grant equity-free funding would be provided by the government through PSF. This setup allows a 20% risk underwriting or potential upside for venture deals.” He emphasised the growing presence of venture capital in Pakistan, with various domestic and international funds already committing investments.
Saif pointed out that Pakistan has 1.5 million freelancers who have received government training over the years. However, a majority of them lack the resources to purchase a computer worth Rs300,000 or establish their own offices. To address this issue, the government plans to create private-sector co-working spaces, requiring a Rs50 billion investment, for half a million freelancers. The IT minister reaffirmed that the necessary funds have already been allocated for this endeavour.
He noted, “Now, half a million freelancers in the private sector, and another half million in the public sector, each earning $30 a day. While it is ambitious, let’s assume $30 a day. That totals $10 billion a year, equivalent to one-third of Pakistan’s entire annual exports, valued at $30 billion.”
Deputy Governor of the State Bank of Pakistan (SBP), Saleem Ullah, emphasised that IT developments in the country have the potential to be a game-changer for economic growth. He highlighted the significance of the IT sector in boosting Pakistan’s balance of payments. He also encouraged IT companies to reduce their imports of IT products to help curb the import bill.
Published in The Express Tribune, October 27th, 2023.
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