Published On: Tue, Nov 24th, 2015

Pakistan’s digital economy can spur ecommerce growth in Asia: GSMA


KARACHI: Pakistan’s ecommerce market, which is still in its infancy, could play a more central role in the growth of online shopping in Asia, says an international study on Tuesday.

“Pakistan has the foundations in place for digital commerce to take off, but for providers to take advantage of the opportunity, key barriers still need to be overcome, including an informal and cash-based financial system…,” says a GSMA report, ‘Building digital societies in Asia: Making commerce smarter’, which looks at developments in six Asian countries – Bangladesh, India, Indonesia, Malaysia, Pakistan and Thailand.

The GSMA (Groupe Speciale Mobile Association), which represents 800 mobile operators and more than 250 companies in the broader mobile ecosystem worldwide, says Pakistan remains a largely underserved market in terms of digital access and digital payment and around 80 percent of all transactions in the country are cash-based.

Annual ecommerce turnover in the country is barely two million US dollars; 70 percent of e-commerce activity is based in urban areas. Lahore accounts for 21 percent of total e-commerce traffic each year, followed by Karachi with 20 percent and Islamabad and Rawalpindi with 15 percent.

The study enumerates several challenges in the way of Pakistan’s development as a digital economy.

Some of them include, “weak legal and regulatory frameworks, digital illiteracy, and a lack of awareness of what digital commerce is and how to access it,” it says.

“Success going forward requires collaboration between all stakeholders involved including government and regulators, mobile operators, financial institutions and fintech companies.”

The report says mobile money plays an important role with half of the adult population in Pakistan (approximately 60 million people) having access to a mobile phone but not having a bank account.

“Branchless banking in Pakistan has grown at a faster rate than the traditional banking system and has extended the reach of financial services to the unbanked and the poor,” it adds.

However, the report says unique mobile subscriber penetration in Pakistan (percentage of population) stood at only 31 percent at the end of 2014, which is less than unique subscriber penetration in peer countries and below Asia Pacific’s average of 45 percent.

In Thailand, it is highest 56 percent, Malaysia (54pc), Bangladesh (41pc), Indonesia (40pc) and India (36pc), showed the report. Mobile broadband penetration in Pakistan is five percent

The GSMA says fixed broadband penetration in the country is only around one percent, “making mobile the only effective channel for connecting to the internet.”

“By 2020, 3G coverage is expected to reach 90 percent of the country’s population, and mobile broadband is expected to reach 40 percent,” says Alasdair Grant, the GSMA’s Head of Asia.

“…the challenge now lies in increasing the number of digital commerce accounts and promoting digital payments…”

The available localised payment platforms are EasyPay, HBL, MCB and UBL, “but they are still fragmented,” says the study.

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Shahid Tariq

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