When the world of information technology (IT) saw mushroom growth, few had imagined that IT products and services from one country alone would outweigh the value of oil exported by the world’s leading producer, Saudi Arabia. As per a Reserve Bank of India survey, exports of software services in 2021 totalled a whopping $148.3 billion — almost 20 percent higher than the value of oil exported by Saudi Arabia during the same period. Global crude price fluctuations aside, the simple fact that IT services could outweigh the earning from oil should serve as a wakeup call to policymakers and key decision-makers with respect to the massive earning potential this sector holds for the developing and emerging economies.

During the fiscal year 2020-21, Pakistan’s IT exports crossed the $2 billion mark for the first time in history. This 47 percent growth was following a record year of earning in 2019-20 when exports had reached $1.44 billion. In addition to being the offshore home to a number of leading US-based IT companies, Pakistan now has one of the world’s largest number of freelancers. These independent experts in different fields like digital marketing, graphic design, and software development, to name a few, have helped the country consistently become one of the top 10 countries for freelancing. In terms of pure growth, the Online Labour Index report by the Oxford Internet Institute (OII) places Pakistan at the 4^th rank in terms of growth of freelancing services.

It is important to point out the interplay between various factors here. For starters, Pakistan is on its way to becoming the most urbanised nation in South Asia by 2025. More than 60 percent of its population is between the ages of 15 and 33, making the country the 5^th largest “young country” in the world. A higher proportion of youth is a potential driver of economic growth and progress, provided the youth are well equipped with the knowledge and skills required to compete or at the very least make a mark in the global marketplace.

Increasing mobile phone penetration among the masses, availability and access to internet, and untapped opportunities in retail and fintech are to thank for in part for this massive growth. It also helps that internet users in Pakistan have tripled over the past five years or so, reaching almost 110 million active users.

While existing trends in freelancing are highly encouraging, it doesn’t take more than a cursory glance for us to understand that enormous potential is lost out on due to a lack of resources and technical skill training of youth at both public and private sector institutes. Computer courses that are still stuck in the 1990s, make little or no progress in terms of programming or analytical thinking, and provide little (if at all) exposure to digital communications. This needs to change if the opportunity is to be capitalised upon.

Growth of startups, entrepreneurial ventures, and freelancing in general may also be stunted by the government’s new proposal to add a 17 percent sales tax to different items, including computers and IT products. While depreciation of the Pakistani rupee has already made the latest technology unaffordable for the masses, a proposed 20 percent tax on the internet will hamper online access instead of making it more accessible. When access to technology becomes expensive, both tech-enabled growth and the startup ecosystem suffer. Policymakers and influencers must understand that the longer-term economic benefits — a mantra to many in positions of power today — demand that access to information and technology be eased.

Furthermore, lack of a clear policy in terms of opening and operating bank accounts is a common challenge startups and freelancers face. With transactions often originating abroad, many banks are hesitant to take on board such customers despite the fact that they can bring in significant foreign exchange.

Similar challenges in payments via external channels and the lack of any reputable overseas financial services in the country are hurdles national regulators and concerned ministries need to resolve at the earliest.

Despite the challenges, the startup sector in Pakistan had its best year yet in 2021. Venture capital investments in novel ideas born in Pakistan exceeded the combined total from the last six years, reaching $ 300 million. Increasing mobile penetration among the masses, availability and access to internet, and untapped opportunities in retail and fintech are to thank for, in part, for this massive growth.

It also helps that internet users in Pakistan have tripled over the past five years or so, reaching almost 110 million active users. This, combined with the existing proportion of youth excites the investors. Eventually, the potential for adoption of new technologies and services looks massive, and it is making Pakistan a choice destination for investment.

The writer is a development sector professional with nearly a decade of experience in communications and reporting. He has supported the implementation of The World Bank’s Disaster and Climate Resilience Improvement Project (DCRIP) and ADB’s Flood Emergency Reconstruction and Resilience Project (FERRP) in Pakistan.