Heavier gas burden
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As Pakistan's economic managers scramble to plug widening fiscal gaps and meet IMF benchmarks, the weight of their decisions continues to fall squarely on those least able to bear it. The latest move — a 50% increase in fixed charges on residential gas bills — is yet another blow to already struggling households. Without changing the per-unit gas tariff, the state has quietly increased the mandatory monthly cost of gas, turning an essential utility into a luxury for many.
The decision, approved by the Economic Coordination Committee (ECC) of the Cabinet, will push fixed charges for protected domestic consumers from Rs400 to Rs600, regardless of how little gas they actually consume. This disproportionately penalises low-income households — the very segment these "protected" categories are meant to shield.
Even those who use minimal gas to conserve energy will now see their bills swell, simply for staying connected to the grid. The timing of the decision — just days before the start of the new fiscal year — is also telling. It reflects the Finance Ministry's growing reliance on regressive measures to meet revenue targets in the face of mounting debt obligations.
Furthermore, gas tariffs for non-residential consumers — including industries and power plants — have been increased by an average of 10%. While this may be aimed at rationalising subsidies and improving circular debt recovery, it risks compounding inflationary pressures and stifling industrial competitiveness. Yet, no clear roadmap has been presented for energy sector diversification or investment in sustainable alternatives.
The lack of a progressive taxation model and repeated reliance on indirect levies do not show fiscal prudence and are making survival harder for ordinary Pakistanis. Austerity without accountability is not reform. And unless the state starts prioritising equity in its fiscal decisions, public trust will continue to deteriorate.
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Express Tribune
2 hours ago
- Express Tribune
Pakistan's financial inclusion test: a tap away but still out of reach?
It starts, often, with someone else's phone. A woman in a small town outside Lahore wants to send money to her son in Karachi, but she doesn't own a mobile wallet. Her brother does, so she asks him to do it. In Karachi, a fruit seller keeps a basic bank account, not to save, but because he needs it to receive welfare payments. He rarely logs in, never checks the balance himself, only his nephew knows how to use the app. Another elderly man is told he's been registered for something called Raast, but he still walks to the local shop every week to collect cash from his cousin. But sometimes, it starts with your own. A tailor in a two Tando Adam, near Hyderabad now takes digital payments through his mobile wallet, no more waiting for change, no more handwritten ledgers. A housemaid in Karachi uses Raast to send part of her salary home instantly, something that once meant hours in line at a branch she never felt comfortable entering. These are not outliers. They are the shape of inclusion in Pakistan today - present on paper, uneven in practice. In 2014, only 7% of Pakistani adults were financially included, meaning they had an account in their own name with a regulated institution. By 2024, that number has climbed to 35%, thanks mostly to mobile wallets and digital accounts that are easier to open than traditional bank accounts. At a glance, it looks like progress. And in many ways, it is. But access tells only part of the story. For millions, having an account doesn't mean using it. For women, especially, the barriers are deeper - fewer phones, fewer SIM cards, and even less confidence. For the poor, the excluded, the unbanked, formal finance still feels unfamiliar, too complicated, too distant, too risky. And for the system itself, the challenge now is not just to count accounts, but to build trust, relevance, and resilience. The numbers may have moved. But the ground beneath them hasn't shifted as much. A statistical shift Over the last ten years, Pakistan has seen more people brought into the financial system than in the decades before combined. The growth hasn't been slow or subtle, it's been sharp and sweeping. This shift is captured in the Karandaaz Financial Inclusion Survey (K-FIS) 2024, a national study that tracks how real people across Pakistan access, use, and trust financial services. Now in its ninth wave, the survey offers a decade-long view of what financial inclusion looks like on the ground, not just in policy terms, but in lived experience. In 2014, just 7% of adults had an account. Today, it's 35% — over one in three Pakistanis now has access to some form of regulated financial service, be it a bank account, a mobile wallet, or an account with a non-bank financial institution.. But the real story isn't just the overall growth. It's how that growth happened. Banks, which were once the main face of financial inclusion, have seen only a modest rise, from 8% in 2014 to 17% in 2024. In contrast, mobile money wallets have exploded, climbing from virtually zero to 30% in a decade. The shift has been particularly dramatic in the last two years alone, wallet registrations jumped from 19% in 2022 to 30% in 2024. This shift happened not in boardrooms, but in neighborhoods, on phones of riders, house staff, shopkeepers and home-based entrepreneurs. The ease of opening a mobile wallet, no branch visits, no intimidating paperwork, no waiting lines, meant millions once excluded could now touch the system. And then came Raast, the State Bank's instant payment system. In just two years, wallet registrations through Raast jumped from 17% to 41%. Among those using it, 77% cited speed, and 43% said it was more affordable than traditional transfer methods. Even bank registrations with Raast more than doubled, from 22% to 47%. But while access expanded, it didn't expand evenly. Punjab leads at 40%, followed by Islamabad (38%) and Gilgit-Baltistan (33%). Balochistan, AJK, and Sindh lag at 23–26%. These numbers aren't just statistics; they translate to millions of people who are either newly able to pay bills digitally or still standing in line at the local utility office. Urban areas, unsurprisingly, continue to outpace rural ones. Cities benefit from better telecom infrastructure, more agent networks, and greater mobile phone penetration. In villages and remote areas, access often depends on whether there's a mobile signal strong enough to open the app, or a shopkeeper willing to guide someone through a transaction. Even usage varies. K-FIS data shows that while 45% of adults say they've used a formal financial service at least once, only 33% are actively using their accounts, meaning they've made a transaction in the last 90 days. And fewer still are 'advanced users,' those comfortable with features beyond just cashing in or out. What this tells us is simple - access has grown, but depth of use still lags. People are opening accounts. But not everyone is using them. Not regularly. Not confidently. Not yet. Bridging the trust gap In Pakistan, access to financial services has expanded dramatically, but confidence in the system hasn't always kept pace. Despite easier account opening, mobile onboarding, and branchless banking, many people still prefer the comfort of what they know, informal borrowing, physical cash, and financial arrangements within families or communities. This isn't just anecdotal, 85% of borrowers still rely on informal sources. It's a powerful reminder - inclusion on paper isn't always inclusion in practice. For Muneer Kamal, CEO and Secretary General of the Pakistan Banks' Association (PBA), this is where the next chapter of financial inclusion must begin. 'Pakistan has made significant strides in advancing financial inclusion,' he acknowledges. 'But longstanding structural challenges persist, hindering further progress.' Among those challenges is the staggering amount of money still operating outside the formal economy. 'Currency in circulation is estimated at over Rs9.4 trillion in 2025, nearly 26 to 27% of the overall economy,' Kamal points out. The dominance of cash weakens formal systems and makes the shift to digital usage even more difficult. Documentation requirements are another obstacle. 'A large portion of the adult population lacks verifiable income proof, tax records, or formal employment history,' he explains. 'This makes them ineligible for loans or other lending products.' The result - a growing segment with accounts in hand but no real access to the tools that build financial resilience. But instead of seeing these as dead ends, banks are treating them as starting points. 'PBA member banks are adopting a multi-pronged strategy,' Kamal says, 'To further improve trust in formal banking, particularly across underserved and remote communities.' The first part of that strategy is simplified access, cutting down friction through digital onboarding, branchless banking, and partnerships with Electronic Money Institutions (EMIs). People can now open accounts using only a phone, without visiting a branch. Yet real change, Kamal notes, also comes from physical presence. Banks are reaching out through mobile vans to low-access districts and establishing women-led branches staffed by female 'champions' who offer both services and reassurance. These efforts are supplemented by the National Financial Literacy Program (NFLP), where banks conduct in-person community sessions to raise awareness and comfort around digital tools. 'In line with SBP guidelines, banks have collectively strengthened their complaint resolution processes, improved transparency, and enhanced customer communications to build user confidence,' Kamal adds. This work extends to the design of financial products themselves. The days of one-size-fits-all banking are giving way to customized offerings for youth, rural workers, gig economy participants, and women entrepreneurs. Kamal believes such relevance is non-negotiable, 'Banks are tailoring their offerings to ensure that financial solutions are not only accessible but also meaningful.' Still, innovation is not always seamless. Kamal points out that, 'Regulatory complexity continues to slow innovation and inclusion. Although Pakistan's framework has improved, challenges persist, especially for fintechs and non-traditional service providers.' What's needed, he says, is 'A more enabling framework, one that ensures robust cybersecurity while simplifying compliance.' And at the center of it all lies data, or the lack of a connected digital ecosystem. 'There are various disjointed data repositories, from NADRA to the banking sector, to telcos and power consumers,' he explains. 'But this data is not accessible via a common platform, which is a starting point for promoting digital lending, the most powerful tool to harness financial inclusion in Pakistan.' Gendered exclusion She may have a CNIC, a smartphone, and sometimes even an account, but when it comes to full participation in Pakistan's financial system, the average woman is still standing at the edge, waiting to be invited in. According to K-FIS 2024, the gender gap in financial inclusion remains stark. Only 25% of women in Pakistan are financially included, compared to 49% of men. And while 81% of men have a bank account, that number drops to just 47% for women, underscoring a 34% gap in gender-based financial inclusion. Often, even those accounts are not truly theirs to control. Many are opened under pressure, or operated by husbands or brothers, leaving women technically included, but not in control. This disconnect between access and agency is precisely what banks are starting to tackle, especially those offering Shariah-compliant services. For BankIslami, the solution lies not just in offering Islamic banking, but in designing it for her from the ground up. 'The Mashal Banking initiative by BankIslami is specifically designed to cater to the unique needs of the female population of Pakistan, from all walks of life,' says Sohail Sikandar, Chief Operations Officer. 'While every product offered by the bank is relevant for female customers, these particular products have been curated through a gender-lens analysis to address the financial needs of women.' The idea is simple, make finance feel safe, simple, and tailored, values that resonate with women across income brackets, particularly those stepping into formal banking for the first time. But the bank didn't stop at products. They wanted the experience to reflect the change too. 'Earlier this year, we launched its first fully women-managed branch in Karachi to promote gender equality in the workplace,' Sikandar shares. 'The branch, operated entirely by female employees, is an initiative aimed at empowering women as both professionals and customers in Pakistan's financial sector.' Interestingly, this tailored approach is unfolding alongside a much larger shift - the rise of Islamic digital banking. And according to Sikandar, it's outpacing conventional banking models in more ways than one. 'The growth of Islamic digital banking is driven by two key factors - the overall expansion of digital banking and the increasing adoption of Islamic banking,' Sikandar explains. As of now, mobile banking app users in Pakistan have reached 21 million, while branchless banking wallet users total 64.3 million, and e-money users stand at 4.7 million, all showing steady year-on-year growth. What's pushing this forward is not just user preference, but also policy direction. 'The State Bank of Pakistan's goal to convert conventional banks to Islamic banking by 2027 has further accelerated the sector's expansion.' That makes the convergence of Shariah-compliant finance and digital platforms a powerful catalyst, especially for reaching women who want faith-aligned, secure, and convenient financial services. 'As a result, the integration of digital technology with Islamic banking is bound to surpass conventional banking models in both usage and adoption. With expanding digital infrastructure and growing consumer awareness, Islamic digital banking is set to become the new standard, offering ethical and accessible financial solutions to a broader population,' Sikandar adds. Fast, cheap, connected A few years ago, sending money in Pakistan meant choosing between a queue at the bank or a trip to a money transfer agent. Today, a growing number of Pakistanis are using their phones to transfer funds within seconds, thanks largely to the rise of Raast. According to K-FIS 2024, the share of adults making digital transactions has grown by 11 percentage points in the past three years, driven by higher smartphone penetration and simplified user journeys. But the question remains, has Raast become the great equalizer? Or is it still finding its feet among the underserved? The banking sector believes the potential is just beginning to unfold, and the PBA has been right at the center of this transition. 'PBA has played a central role in facilitating and coordinating the industry-wide adoption of Raast,' says CEO and Secretary General, Kamal. The efforts, he explains, cut across policy, operations, and public engagement. 'PBA has worked closely with SBP to ensure member banks are aligned on timelines, interoperability standards, and incentives. Through subcommittees and bilateral dialogues, PBA has coordinated responses to integration challenges.' But the work hasn't stopped at backend systems. Changing habits requires awareness, especially among those who are newer to formal banking. Kamal shares that, banks continue to roll out informational campaigns to promote Raast's use for everyday transactions, salaries, and government payments, especially for women and small businesses. PBA also monitors wallet usage and advocates for use-case expansion beyond just person-to-person transfers. From access to readiness Having a bank account is one thing. Knowing how, and why, to use it is another. In Pakistan, financial inclusion often stalls at the point of access. People may have accounts, but many are left inactive. While over 64% of adults now hold bank deposit accounts (SBP, 2024), Kamal notes that, 'The quality of inclusion remains low. In fact, more than half, 54 million deposit accounts, hold less than Rs5,000, underscoring low savings capacity and even lower activity.' They prefer borrowing from family or saving in cash, not necessarily because banks are out of reach, but because they don't always feel right. According to K-FIS 2024, 85% of borrowers still rely on informal sources, and over half of the country's deposit accounts sit idle with minimal balances. The trust deficit is real, especially when banking feels like it conflicts with religious values. That's where Islamic finance has a unique role. 'Globally, Islamic finance is recognized as a well-suited, Shariah-compliant alternative to conventional banking,' says Sohail Sikandar. 'This model eliminates Riba (interest) and operates on a profit- and risk-sharing structure, ensuring that financial services align with the religious values and needs of the population, especially in trust-deficient environments like Pakistan.' Trust is further built through Musharakah, the principle of partnership. 'The concept of partnership (Musharakah) plays a key role in fostering trust through risk-sharing, which is essential for promoting financial inclusion.' From numbers to meaning For years, financial inclusion in Pakistan was measured by one thing - how many people had an account. But the more meaningful question is how many people feel financially included, who not only have access, but use it, understand it, and feel it works for them. The K-FIS 2024 makes this distinction visible. Just 35% of Pakistanis say they feel included in the financial system. Among women, that number falls to 14%. For Kamal, CEO, PBA, these gaps are not just statistical, they are directional. 'This distinction highlights the need to build not just financial access but financial agency,' he says. 'To meet the National Financial Inclusion Strategy (NFIS) targets by 2028, both policy and market interventions must now shift focus from merely expanding access to enabling meaningful usage, financial empowerment, and inclusive credit access.' What might that shift look like? Kamal outlines a roadmap, not in slogans, but in systems. 'Simplify lending eligibility by utilising alternative credit scoring models that incorporate mobile usage, utility bills, and transaction data,' Kamal shares. In a country where large segments of the population operate outside formal employment or tax systems, rethinking creditworthiness is essential. Traditional requirements often exclude the very people inclusion is meant to serve. Then there's the matter of access friction. 'Enable national eKYC and interoperability to reduce documentation friction and account dormancy,' Kamal adds, pointing to the fatigue users experience when navigating siloed platforms and redundant verifications. The challenge isn't just onboarding, it's engagement. PBA believes financial literacy, especially at the grassroots, is the missing link. 'Scaling digital and financial literacy, especially through public-private campaigns targeting women, youth, and rural areas,' Kamal explains, is the only way to convert passive access into active empowerment. And finally, incentives - rewards for action, not just sign-up stats. 'Incentivise usage, not just account opening, through cashback schemes, subsidised Raast-linked payments, or saving bonuses,' he says. It's a shift from counting accounts to creating capacity. Because inclusion is not just about who holds an account, it's about who feels they can hold their ground, make decisions, and shape their financial future. And that, as this decade of data shows, is a far more meaningful metric. For a woman with a phone in her hand, or a tailor with his first digital wallet, inclusion isn't just about being counted. It's about being seen, and served, by the system built in their name.
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Express Tribune
5 hours ago
- Express Tribune
Traders underline need for B2B exhibitions
The collaboration between Raast and Buna will help overseas Pakistanis in instantly sending remittances back home through the digital infrastructure, making cross-border transactions easy and convenient. PHOTO: FILE Listen to article The Hyderabad Chamber of Small Traders & Small Industry has advocated for organising dedicated business-to-business (B2B) exhibitions and road shows in Hyderabad, specifically for chemical and allied industries, as such initiatives will provide local manufacturers and traders with direct access to business opportunities and innovative technologies. A high-level delegation of HCSTSI, led by Vice President Shan Sehgal, participated in the Pakistan Chemical Expo 2025, organised at the Karachi Expo Centre. The delegation visited various stalls and held detailed meetings with representatives of leading national and international companies from chemical, packaging, waste management, energy and allied industrial sectors. These industry leaders expressed keen interest in collaborating with HCSTSI and showed their intention to visit Hyderabad and engage with the chamber in the near future. Speaking on the occasion, HCSTSI Vice President Shan Sehgal stated that international-standard events like the Pakistan Chemical Expo play a vital role in promoting industrial growth, fostering research and development activities, facilitating technology transfer and creating valuable business linkages. He emphasised that Hyderabad is the second-largest commercial hub of Sindh and home to thousands of active business units across sectors such as chemicals, pharmaceuticals, plastics, cold beverages, food processing and construction. "In light of this, such exhibitions are urgently needed to be organised in Hyderabad to support local industrial advancement." The chamber delegation briefed participating companies about the performance, facilities and investment potential in Hyderabad. They formally invited them to expand their networks and establish operations in the city. The chamber leadership praised the Pakistan Chemical Manufacturers Association and other organisers for arranging a successful and purposeful event and for providing a strong platform for meaningful industrial and commercial interaction.
Business Recorder
9 hours ago
- Business Recorder
Words of caution from Summer Davos
EDITORIAL: It's not every day that the president of the World Economic Forum warns of a 'decade of lower growth.' But that's precisely the message Børge Brende delivered at Summer Davos in Tianjin — a sobering forecast that goes beyond the usual Davos-speak of digital revolutions and climate partnerships. The world, he said, is entering its most geopolitically complex period in decades, and the headwinds facing global growth are intensifying, not fading. Markets have grown used to brushing off geopolitical shocks. The pandemic was followed by a rapid recovery. Russia's invasion of Ukraine triggered initial panic, but portfolio flows resumed quickly. Even the Israel–Iran war, despite its high stakes, has not yet translated into a prolonged financial crisis. But the accumulation of risks — trade fragmentation, armed conflict, political instability — is beginning to show up in macro projections. Both the World Bank and IMF have now revised global growth forecasts for 2025 downward, from 2.7pc to around 2.3pc. That may not sound catastrophic, but in a world fuelled by debt and liquidity, even a half-point drag on global GDP has wide-ranging implications. It affects not just trade flows and commodity demand, but sovereign debt sustainability, social stability, and the room central banks have to ease. Brende's warning is timely, not just because of the numbers, but because of the structural shifts underway. The world isn't simply in a slowdown — it's in the early stages of a strategic reordering. The US-China trade war, once dismissed as a Trump-era anomaly, is now institutionalised policy. China, which still accounts for about 30 percent of global growth, is shifting inward — away from export dependency and toward domestic consumption and digital services. That transition is necessary, but it's not without turbulence. Beijing's real estate market remains fragile, consumer confidence is uneven, and supply chain recalibrations are far from complete. If the Chinese engine sputters, the rest of the world will feel it. In parallel, the multilateral trade order that underpinned decades of growth is losing traction. New regional blocs, tariff walls, and subsidy races have become the norm. The return of industrial policy may excite national planners, but it fragments global efficiency. When war in one region sends insurance premiums, energy costs, and shipping rates soaring, it becomes harder to pretend these shocks are local. They're systemic—and cumulative. What's particularly worrying is that none of this exists in isolation. As Brende pointed out, the traditional lines between economic and security policy are now blurred. Conflict doesn't just disrupt supply chains; it drives trade strategy. Currency wars give way to chip bans. Defence deals morph into energy alliances. And through it all, global governance institutions struggle to keep pace. For developing economies, including Pakistan, this complexity is doubly dangerous. Growth in the Global South has historically ridden the coattails of open trade, capital flows, and commodity cycles. Now, with a flipped interest rate cycle, declining aid flows, and a global turn inward, that model is under pressure. And while the wealthy world debates reshoring and AI regulation, developing countries are facing food inflation, energy volatility, and climate shocks without the fiscal space to absorb them. The point is not that growth will vanish. It won't. But its sources, reliability, and beneficiaries are shifting. If the coming decade is marked by structural fragmentation and political brinkmanship, growth will become a more selective story—dependent on stability, institutional strength, and geopolitical alignment. Brende's message, then, isn't just a warning. It's a challenge to policymakers who still act like the post-2008 playbook applies. It doesn't. The new normal is one of overlapping crises, diminishing buffers, and increasingly short market patience. Anyone not preparing for that reality is setting themselves up for failure. Copyright Business Recorder, 2025
