• Harman Tutt

Go Further, Together: Pakistani Tech Companies Need Better Politics

They deserve better. But, the question is, will they get it?

The relationship between politics and technology is one akin to a parent-child relationship. If a child gets into a prestigious university, parents would claim it was their ingenious influence and nurturing hands that opened the doors. Conversely, if that same child had taken a different path and ended up selling illegal narcotics, those same parents would condemn that child and absolve themselves of any responsibility whatsoever. The truth of their influence is probably somewhere in the middle.

That technology companies grow outside the realm of politics is a prevailing Silicon Valley tradition that resembles the liberartarian view of many in the Bay Area. Under former Prime Minister Imran Khan, Pakistan emerged as a burgeoning technology-ecosystem raising more money than they had done in the previous 5 years in 2021 alone. Analysts and commentators alike are quick to point to the conducive demographic, social, educational and digital conditions that facilitated such growth.

First, Pakistan is the fifth most populous country in the world with over 221 million people and an under-25 population of 114 million. Second, these young people are highly educated, particularly in engineering, with more than 200,000 graduates being churned out of the 190 accredited universities in the region. Third, a strong middle class estimated at 82 million in 2018 led to a consumer spending of $257 billion in 2018. And finally, analysts point to noticeable growth in its digital presence as people are engaged on social media thanks to affordable internet now $0.59 per gigabyte. In 2013, there were only 3 million broadband subscribers which increased to 50 million in 2018 and is now at 110 million, most of which are mobile. All of which are fertile conditions for an emerging technological market.

Yet, these conditions do not exist in a vacuum but against a political and regulatory background that could make life easier for startups or a lot harder. Thankfully, for Pakistan’s prospects, life was made easier from 2018 to 2021. In February 2020, the State Bank of Pakistan permitted the establishment of holding companies to incentivise foreign investment to which both Kleiner Perkins and First Round Capital took advantage of. Until then, Pakistani law did not permit local companies to be owned by foreign holding companies. At the end of 2020, Special Technology Zones were introduced which provided both the infrastructure and regulatory framework to encourage the ecosystem’s growth. Both changes were particularly fruitful during the COVID-19 pandemic as venture capitalists became more comfortable doing deals on Zoom. Technology companies, as a result, took off. By the end of 2021, over 50 startups had raised a combined total of over $325 million. Changes in regulation had led to foreign investments in innovation. Underpinning much of the foreign investment was the perceived trust in the legitimacy of Pakistan as Imran Khan marked a turn from the untrustworthy political dynasts that preceded him.

With the Sharif family now at Pakistan’s helm again, elites need only look at the eye-watering numbers propelling their economy to maintain the liberalising and trustworthy regulatory environment that Khan helped create. Whether foreign growth investors fancy a more risky bet or Zoom fatigue leads their eyes closer to home are potential issues that may threaten the ecosystem. With companies as nascent but unproven as Pakistan’s, one negative press release could cause an avalanche threatening hundreds of new companies. What is certain, however, is that Pakistan’s technological future is only just beginning. It just needs parents who will make the journey smoother, not more difficult.