akistan is at an important stage in its journey towards economic transformation. The digital economy offers unprecedented opportunities to harness the potential of its youthful population. With the 190.27 million of the population under the age of 40, the country’s demographic profile is a huge nasset. If utilized effectively, this youth bulge can lead to substantial economic gain and position Pakistan as a competitive player in the global digital marketplace.

The digital economy spans freelancing, e-commerce, online gig work, software development, gaming, animation and other ICT services. These sectors offer high-growth potential and align well with the skills and aspirations of Pakistan’s youth.

The rise of e-commerce platforms and freelance marketplaces has democratised access to global markets, enabling the youth to participate in the global economy. Platforms like Upwork, Fiverr, and Freelancer have empowered Pakistani freelancers to tap into international projects, significantly boosting their income and skill levels.

The gaming and animation sectors are also promising, offering lucrative career opportunities. Current projections indicate that the global video games market will reach $282.30 billion in 2024, and with an annual growth rate of 8.76 percent. It will reach $363.20 billion by 2027. Pakistan’s market share, though modest, is rapidly growing.

These industries generate direct employment and drive subsidiary sectors such as marketing, content creation and software development. The information and communication technology sector, including front-end and back-end development, is crucial for modern businesses.

Businesses increasingly recognise Pakistan’s tech talent for its proficiency and cost-effectiveness, making it an attractive destination for outsourcing and business process outsourcing. The country’s information technology and IT-enabled services (ITeS) export remittances, comprising computer services and call centre services, reached an all-time high of $3.223 billion in the fiscal year 2023–24, marking a 24 percent growth from $2.596 billion in 2022–23.

To fully realise the potential of its digital economy, Pakistan must address the digital divide that persists across various regions and socio-economic groups. Expanding broadband access and digital infrastructure is critical.

World Bank’s Digital Economy Enhancement Project, which aims to improve broadband connectivity and digital services, is a step in the right direction. Such initiatives can ensure that the benefits of the digital economy reach all segments of a society.

Investing in digital skills and education is paramount. Programs like the Digital Youth Summit in Khyber Pakhtunkhwa highlight the importance of equipping young people with the skills necessary to thrive in the digital economy.

These initiatives provide training in coding, digital marketing and entrepreneurship, advancing a culture of innovation and self-employment. Government policies play a crucial role in nurturing the digital economy.

Current policies focus on skills training, business incubation and digital infrastructure development. Providing tax incentives and creating a conducive regulatory environment can attract both local and foreign investment.

Turning CNICs into e-IDs will enable access to government e-services, while the use of AI and IoT can help develop citizen-centred e-services. Introducing a National IT Service as a new career path will attract IT specialists. 

International organisations such as the World Bank, the Asian Development Bank and various UN agencies have been instrumental in supporting Pakistan’s digital transformation.

Projects focusing on digital skills training, entrepreneurship and infrastructure development have provided much-needed resources and expertise. Continued collaboration with these organisations can help Pakistan achieve its digital economy goals.

A thriving digital economy in Pakistan could have a significant economic impact. The ICT sector alone has the potential to significantly contribute to GDP, create millions of jobs and reduce unemployment rates, especially among the youth. The digital economy could have a multiplier effect, driving innovation, improving productivity and enhancing the country’s global competitiveness.

To capitalise on this potential, Pakistan must implement pragmatic SMART (specific, mMeasurable, achievable, relevant and time-bound) recommendations. Expanding broadband infrastructure to underserved areas is essential for inclusive digital growth.

In June 2024, broadband penetration in Pakistan stood at approximately 57 percent, indicating significant room for improvement. Investment in digital literacy programmes is crucial. Efforts in this regard must target both urban and rural areas and bridge the educational divide.

Creating a supportive regulatory environment that encourages digital entrepreneurship and innovation can attract local as well as international investment. This includes simplifying business registration processes, providing tax breaks for tech startups and ensuring robust intellectual property protections.

Public-private partnerships can leverage the strengths of both sectors to drive digital transformation. Initiatives like Tech Valley, Abbottabad, which brings together government, academia and industry, serve as models for advancing innovation ecosystems. These partnerships can scale successful pilot projects, ensure resource allocation efficiency and promote knowledge sharing.

Implementing targeted social protection programmes for online gig workers can help as most gig workers operate without social safety nets. Establishing mechanisms for health insurance, retirement savings and skill development for gig workers can provide stability and encourage more people to participate in this sector.

Digital government is a step in the right direction, improving the overall infrastructure via digitaliaation, including the revenue boards and departments, the National Assembly and the Supreme Court.

To accelerate public sector digitisation and transformation, Pakistan should establish a lead digital agency to provide strategic direction, oversight and data governance. Federal and provincial agencies must proactively adopt e-government and digital service delivery, following a standardised framework that takes a programmatic approach to improving efficiency and citizen experience.

Turning CNICs into digital IDs (e-IDs) will enable seamless access to government e-services. The use of AI and IoT can help develop citizen-centric e-services. Introducing a National IT Service as a new civil service career path can attract and retain IT specialists, thereby improving IT expertise in the government.

By adopting these measures, Pakistan can harness the potential of its digital economy, empower its youth and drive sustainable economic growth. The country’s digital transformation is not just a technological upgrade but a comprehensive shift towards a more inclusive and prosperous future. With strategic investments, policy support and a focus on equitable access, Pakistan’s youth can lead the nation’s digital revolution and make significant contributions to the global digital economy.

Abdullah Khalid is a researcher at the Sustainable Development Policy Institute

Dr Maaz Hashmi is an independent policy researcher