Sabir Quraishi, a second-generation Afghan refugee, would wait on the greenbelt in drizzling rain and scorching heat to secure some work in construction. Going back to his aged parents and a disabled older brother with hardly Rs150 in hand was Sabir’s everyday reality.

Keeping the budget aside, Pakistan’s current minimum wage is Rs25,000, and millions are pushed even below this. With added barriers, such as gender, caste, and ethnicity, the opportunities to work narrow further.

However, Sabir changed his destiny by utilising his smartphone and access to the internet. In November 2022, he took a leap of faith and borrowed Rs2,500 from his friend to enter the e-commerce industry as a supplier. “I really wanted to try my luck with e-commerce, so I promised my friend to return his money in just a few weeks. I didn’t know how, but deep down, I knew this would work out for me.”

His first supplies of fourteen facewashes were sold out in a day, and he earned a profit of Rs1,680. Sabir did not stop there. He ventured to cutlery, cosmetics and clothes. By understanding the market trends he is now able to earn at least Rs40,000 with each batch of supplies. On average, Sabir earns Rs120,000 every month.

Startups can potentially rewrite the fate of Pakistan’s poor but challenges limit the number of people they can help

With internet penetration at 36.5 per cent, the lifestyles of the masses of Pakistan are on the brink of change. With just one smartphone and access to the internet, anyone can set up their online business, or become a reseller, in the e-commerce industry.

E-commerce in Pakistan is still in its nascent stages, but it is growing rapidly. According to the State Bank of Pakistan, registered e-commerce merchants increased from 571 in 2015 to 1,516 in 2019. Similarly, e-commerce transactions increased from 3.4 million in 2015 to 29.7m in 2019. A report by eMarketer shows that e-commerce sales are projected to go up to $2.1 billion in 2023.

Markaz is one such startup that allows its users to become resellers without any investment. This means the users can resell listed products among their social circle by charging a profit of up to 100pc of the listed price.

The kind of users Markaz targets are the ones who otherwise have no means of financial independence. “A lot of the women thank us for providing them with an opportunity to work while maintaining their purdah (religious veil). Most of our women are homemakers who never had any exposure outside of domestic chores. But with reselling, they are able to collect funds for major life events like children’s weddings,” recalled a customer service associate at Markaz.

E-commerce startups are not alone. The technological boom in Pakistan is being utilised to address the crippling development problems of Pakistan.

A Chitral-based startup, AIVestify, is working eradicate poverty in the valley using artificial intelligence. “By leveraging AI technology, we can identify areas where poverty is widespread, assess the impact of our intervention and allocate resources more efficiently,” said Khairuddin Shaidani, CEO of AIVestify, in a press conference in February.

The startup aims to create a trillion-dollar fund by 2030 and empower the Chitrali community by offering free online earning and AI technology courses. It targets the poor and uneducated youth, who otherwise do not have the means to enter the formal economy.

“After losing Rs2.5m and four years, I have created this programme specifically for fresh or jobless youth and working professionals eager to learn online business and enter the exciting world of trading,” writes Mr Shaidani while announcing a course on his Linkedin.

The roadblocks

Pakistan is primarily a cash-based economy, with access to digital banking to only 21pc of the population. In a situation as such, it becomes difficult to pertain transparency in online businesses. It is not uncommon here for customers to not receive an online order to avoid paying when the time comes.

“I placed 15 orders, and all of them were returned,” said Shazia Khan, a reseller in a Facebook group. “A lot of the orders were returned because they couldn’t be delivered on time,” she added.

“Digital payments and logistics are the main pillars for e-commerce,” said Shoaib Khan, CEO of Markaz. “There is demand from the hills to the deserts, but not many delivery services are available only in big cities,” he added.

Similar is the case with online payments. When there is a lack of trust in delivering the right products at the right time, a lot of the customers will not be comfortable making advanced payments.

Despite an impressive rate of digital penetration, e-commerce platforms haven’t gained a great deal of traction in Pakistan because most transactions are cash-based. Studies estimate that nearly 95pc of companies in Pakistan receive payments for their online orders via cash-on-delivery — and a large unbanked population makes the transition to digital payments only more difficult.

Due to a volatile political environment, Pakistan also remains vulnerable to power and internet blockade. Although the monetary effect usually recovers, there’s a heavier price that becomes difficult to pay: the image problem.

Tech startups, built on the fundamental model to attract foreign direct investment, often face reluctance from foreign investors due to precarious market conditions.

“Every year, Amazon Web Services (AWS) studies Pakistan as a separate case study from clustered regions. The company is deeply interested in expanding in Pakistan. There is massive potential due to a large population and availability of tech talent, but the company still isn’t here. Why so?” remarked Fawad Hussain, a former employee at AWS.

“There are things outside the IT industry’s control such as stringent policy about data, energy and telecommunication limitation, and security challenges which restrict an international company like AWS from expanding in our country,” he sighed.

Last month, the internet shutdown following the former Prime Minister’s arrest, led to an estimated loss of $3m, according to P@SHA, an association for IT companies in Pakistan.

But what followed was even more astounding. VPN usage closed at 1,329pc more than on the previous 28-day average, noted Simon Migiliano, CEO of Top10VPN, in an article in Al Jazeera. Such a situation paints a clear picture: Pakistanis are tired, and thanks to technological advancement, they are well-prepared to write their own narratives.

The writer is a freelance journalist based in Islamabad

Published in Dawn, The Business and Finance Weekly, June 19th, 2023