AS digital transformation has become an increasingly trendy topic, the government has been desperate to jump onto the bandwagon. Since the early 2000s, several highly publicised efforts have been launched with negligible impact. Countless departments — Ministry of IT & Telecom, Ministry of Science & Technology, national and provincial IT boards, taskforces, councils and committees — and myriad digital, telecom and broadband policies have created hype around digitisation efforts, but the implementation, or lack thereof, has left much to be desired.
At the turn of the decade, it is hoped that Pakistan will be better positioned to take advantage of the leapfrogging opportunity that digitisation presents for emerging economies. To this end, I suggest key priorities the government must focus on: streamlining the policy effort and improving the regulatory environment, expanding digital access and modernising the financial sector.
Technology policy requires multi-stakeholder engagement and inter-agency alignment. For example, the formulation of an effective financial inclusion policy framework must involve, at minimum, the State Bank, federal and provincial finance departments, taxation authorities, banks, and non-bank financial institutions. Innovative policy solutions should include organisations such as Pakistan Post, and give a voice to last-mile users.
The government must do away with the chaos and confusion that has been a hallmark of its approach to technology policy. Improving inter-agency coordination, consolidating the various organisations and fragmented policy interventions, and setting priorities should be the first steps.
Lack of access to online services will increase inequality.
Second, a bottom-up approach is critical if technology adoption is to be harnessed for socioeconomic development. All digitisation policies will have limited impact unless digital inclusion is expanded. As more and more services move online, lack of digital access will greatly increase inequality. Rectifying this requires expanding network infrastructure, making low-cost devices available and imparting digital skills.
The third agenda that must be prioritised is leveraging fintech to repair our broken financial system. While the State Bank has had a supportive approach to financial inclusion, Pakistan’s performance has been unsatisfactory. There is low access to financial services and a persistent gender divide. Alongside increasing financial inclusion for vulnerable citizens, we must strategise for the next frontiers: access to credit for micro, small and medium enterprises, and access to international payment gateways to encourage exports.
Policymakers must also familiarise themselves with technology innovations that can solve our financial sector challenges. For example, increasing use of data analytics in financial services requires efficient solutions for data storage and processing. Pakistan still does not have a clear cloud policy or regulatory environment conducive to cloud adoption.
Overcoming the data localisation myth must go hand in hand with proactive risk mitigation strategies around data security, privacy and protection. Pakistan’s data protection regulatory framework and laws are in urgent need of reform. While encouraging innovation and digitisation, protecting citizens’ right to privacy and securing their data must be the cornerstone of modern technology regulation.
In response to the FATF grey-listing, regulatory technologies (regtech) is a growing field that can help bring our financial system in line with global standards. Rather than continuing to blame our troubles on external forces, Pakistan must demonstrate the will to reform and plug the gaps. Innovative solutions can assist in fulfilment of global anti-money laundering and counterterrorism financing requirements. Big data, machine learning and blockchain technologies, to name a few, can promote compliance, detect suspicious activities and uphold the integrity of our financial system.
In addition to removing redundancies and streamlining its policy and regulatory approach, the government must focus on expanding digital access and reforming the financial sector. Through all these efforts, the government must employ a gender lens and understand the dynamics of the gender gap, as women consistently perform worse across all indicators including device ownership, internet usage and digital skills.
Finally, a data-driven approach is key. As an illustrative example, although it is the trendy topic of the day, the government would do well to take a step back and analyse the data to understand the gaps in Pakistan’s entrepreneurship space before creating more incubation centres with limited impact. Rather than creating countless taskforces, policies and programmes which are inevitably consigned to the ash heaps of history, the government must set priorities and inform policy with data-driven insights.
The writer is a development and technology policy consultant.
Published in Dawn, January 5th, 2020