The digitization of services through mobile technology continues to grow exponentially around the globe. Mobile cash apps have emerged over the past few years, particularly in the emerging markets and play a big part in laying the foundation of financial inclusivity. Governments Must enable Digitization to Improve Fiscal Space.
Countries like China and South Korea adopted this cashless mode of payments years ago and consider it challenging to use any other alternative. Financial transactions through the mobile phone allow countries like Pakistan wider consumer reach and transparency of large and small transactions that cut corruption and undocumented facilitation fee.
The government plays a critical role in establishing an ecosystem necessary for the ICT and technology industry to thrive. Pakistan has seen a fast-paced growth in tech over the last decade or so largely because of a growing middle class and an innovative telecommunications sector. The provision of services by telecom companies has been visibly beneficial for the economy and social development.
Governments Must enable Digitization to Improve Fiscal Space
Mobile cash apps launched a decade ago, now serving 32 million people, allowing Pakistan to be part of the financial inclusion trajectory globally. By introducing banking services to the vast majority of the unbanked population through mobile payments, the telecom sector has taken the opportunity to the people in remote and underserved areas as well. This has a huge impact on those on the margins of society like women and pensioners. Additionally, person-to-government (P2G) services were launched to advance financial inclusion efforts at a larger scale. This inclusion propelled Pakistan into modernizing its economy via digitally enhanced utility bill payments and other convenience fees.
In 2016, the Directorate General of Immigration (DGI&P) and Passports and the National Bank of Pakistan (NBP) decided to implement this convenience into the passport renewal fee process. The agreement for this passport fee services was signed between DGI&P and NBP at NADRA HQ in the presence of the then interior minister.
The launch of passport fee through mobile financial service players i.e. Mobicash, Easypaisa and UPaisa allowed for expeditious fee collection. Mobicash was the choice company to implement the pilot project in Islamabad and Rawalpindi. The successful pilot in service of the citizens and government allowed for a nationwide expansion, where customers paid their passport fees by visiting the nearest mobile money retailer or by using their mobile money accounts.
Why Pakistan’s ecosystem in technology is immature
This helped citizens a great deal by cutting time at long queues at NBP branches. It also put an end to exploitation by agent mafias applying on behalf of citizens outside passport offices. Often this mafia was exploitative and fraudulent.
This was the first P2G service of its kind available nationwide and aided in putting an end to corruption both within the government and the rackets that operated privately. With some 20,000 to 24,000 passports being processed in a month, the digital service quickly become user heavy in various cities. This led to an increased number of empowered mobile money users and encouraged similar public-private partnerships for other government services.
However, at the start of 2019, this service was abruptly brought to a standstill. The necessary protocols remained unarticulated by the government and rolled back the impact the service aimed to create. The opportunity cost to both the government and society is huge.
This has definitely shaken the confidence of mobile banking institutions working to forge similar partnerships to facilitate P2G payments. Currently, there are other mandates like KPK services commission, Islamabad Traffic Police and Karachi Police Department, where JazzCash and Easypaisa are following a similar arrangement, but even these services might become a target of regulatory inefficiencies.
This is an indicator of why Pakistan’s ecosystem in technology is immature. Pakistan’s score on the World Economic Forum’s Networked and Technology Readiness Index is at 110th position. Comparatively Sri Lanka is at 63 and China is at 59 on the index.
The failure of the policymakers and government officials to realize the benefits that come with digital solutions can limit not just the high grossing technology industry but also dwarf other industries that digitalization rests on – such as ride-sharing, tourism, health and agriculture. Online services not only simplify the process for consumers but also for those in positions of power. Online payments can speed tax collection and lead to precision policymaking. Illustratively, NADRA’s online identification system is smoother, efficient and has allowed for documented several citizens outside the net of government care and service.
With an outstanding estimate of 100 million unbanked people making up the country, it is the telecom industry and mobile cash apps that have marched the country ahead in financial inclusion. Such digital tools have proven to empower those living in poverty and illiteracy.
A new digital economy is not a challenging feat, all it requires is the removal of hurdles and inconsistent technology policy.
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