Path to inclusive growth and innovation
In a rapidly digitizing world, Information and Communication Technology (ICT) has emerged as transformative force, behind regional and global progress by fostering innovation, connectivity, and efficiency across various sectors. The growing importance of digital technologies and the emergence of the digital economy in the advancement of societies and economies has been broadly acknowledged. From the industrial revolution to the digital age, technology has consistently propelled social change (Nawaz, H., 2023).
The United Nations' Sustainable Development Goals emphasize the role of (ICT) in realizing universal identification, promoting efficient governance and enhancing financial inclusion, Likewise, a body of literature supports the idea that digital adoption influences economic growth (Arendt, 2015; Eberhard et al., 2015), efficiency (Bygstad & Hanseth, 2019), and job creation (Chege et al., 2020), healthcare opportunities (Haluza, D., & Jungwirth, D., 2015), social inclusion (UN, 2012), and enhances individuals' capacity, mobility, accessibility, and affordability (Yang, Y., et al., 2013). In fact, advancements in digital adoption have influenced all facets of human life (Mitrovic, Z., et al., 2013).
For developing nations, such as Pakistan, digital adoption, literacy, transformation and integration are indispensable for bridging the socioeconomic disparities, creating job opportunities for youth, and enhancing inclusive growth and development. With its transformative potential, ICT remains a key pillar in building a more connected, knowledgeable, and progressive Pakistan.
However, despite its vast potential, in Pakistan, ICT adoption remains uneven across different segments of society. Our upcoming paper for the 38th AGM and Conference of PSDE, revels that in Pakistan, digital literacy remains alarmingly low at just 4.2%, digital usage is comparatively better at 20.1%, but not satisfactory and a majority 93% of individuals have not experienced ICT transformation. Additionally, the findings reveal gender divides in digital adoption, with male outperforming female in all matrices; with 27% of men use digital tools compared to 14% of women. Men also lead in digital literacy (4.3% vs. 2.3%) and transformation (10.1% vs. 3.4%). Region-wise, marginalized areas like Baluchistan and underprivileged communities experiencing lower ICT adoption rates
Consequently, ICT Development Index (ITC 2017) ranked Pakistan at 148 out of 175 countries in the - the lowest among South Asian Association for Regional Cooperation (SAARC) countries. On the Digital Evolution Index, Pakistan was ranked 56th out of 60 countries. Furthermore, the state of internet accessibility in Pakistan is well below international standards and considerably lower than other regional countries. Pakistan has been ranked 90th out of 120 countries on the inclusive internet index.
Our study reveals that in Pakistan's ICT adaptation, literacy and transformation is shaped by demographic characteristics, socio-economic factors, and infrastructural access. Education is the key determinant, with higher educational level increasing the probability of ICT usage and literacy and literacy. Gender divide persist, as males are more likely to adopt ICT. Age is another important factor, with younger individual exhibiting greater ICT adoption compared to older age groups. On the socio-economic front, higher household earnings enhance ICT usage and literacy by enabling access to technology, although remittances do not show a significant effect on digital skill development. Access to ICT and internet at home significantly boosts all three aspects of ICT adoption, creating conducive environments for skill-building and digital engagement. Moreover, individuals living in urban areas and big cities benefit from better infrastructure, connectivity, and competitive environments, which collectively promote ICT transformation. On the supply side, ICT infrastructure at the stratum level plays a significant role in driving ICT adoption.
Given the poor performance in ICT adaptation, literacy, and transformation, and the growing youth population, there is significant potential for positive change, and the good news is that the government is committed to harnessing the digital change, through the 5 Es framework, with a focus on the second pillar—E-Pakistan. The objective is to drive Pakistan into the digital era by ensuring universal access to affordable, reliable, and high-quality ICT services. The focus this initiative is on: Digital Infrastructure, which seeks to provide high-speed internet nationwide, especially in rural and underserved areas; Digital Skills, through initiatives like the DigiSkills programme to boost digital literacy and enhance employment opportunities; Digital Governance, aiming to streamline government services via e-governance platforms; Digital Innovation, fostering a culture of innovation to support startups and research and development; and Digital Inclusion, ensuring that marginalized groups, including women and people with disabilities, are not left behind in the digital revolution. These efforts demonstrate the government's seriousness in addressing ICT barriers and creating new opportunities for all citizens, especially the youth, by unlocking the vast potential of the digital economy.
Additionally, Pakistan Institute of Development Economics (PIDE) is leading the national conversation in this regard. Its upcoming 38thAnnual General Meeting (AGM) and Conference on 'URAAN Pakistan' is bringing together policymakers, researchers, and development experts to explore solutions to pressing challenges, with a particular focus on economic growth and the integration of technology in various sectors of Pakistan.
To sum up, digital adaptation is no longer a choice but it is a necessity for Pakistan's future. If we are to create an inclusive, resilient, and competitive Pakistan, we must treat digital access as a fundamental right. The path forward lies in synergizing research insights, grassroots realities, and policy ambition. The Five-Es initiative is a bold start. Now is the time to operationalize it with urgency, equity, and evidence-based planning.
(The writer is a Research Associate at the Pakistan Institute of Development Economics (PIDE). He can be reached via Email: [email protected])
Copyright Business Recorder, 2025
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Express Tribune
4 hours ago
- Express Tribune
Bangladesh opens fugitive ex-PM's trial over protest killings
Fugitive former prime minister Sheikh Hasina orchestrated a "systemic attack" to try to crush the uprising against her government, Bangladeshi prosecutors said at the opening of her trial on Sunday. Up to 1,400 people were killed between July and August 2024 when Hasina's government launched its crackdown, according to the United Nations. Hasina, 77, fled by helicopter to her old ally India as the student-led uprising ended her 15-year rule, and she has defied an extradition order to return to Dhaka. The domestic International Crimes Tribunal (ICT) is prosecuting former senior figures connected to Hasina's ousted government and her now-banned party, the Awami League. "Upon scrutinising the evidence, we reached the conclusion that it was a coordinated, widespread and systematic attack," Mohammad Tajul Islam, ICT chief prosecutor, told the court in his opening speech. "The accused unleashed all law enforcement agencies and her armed party members to crush the uprising." Islam lodged charges against Hasina and two other officials of "abetment, incitement, complicity, facilitation, conspiracy, and failure to prevent mass murder during the July uprising". Hasina, who remains in self-imposed exile in India, has rejected the charges as politically motivated. As well as Hasina, the case includes ex-police chief Chowdhury Abdullah Al Mamun -- who is in custody, but who did not appear in court on Sunday -- and former interior minister Asaduzzaman Khan Kamal, who like Hasina, is on the run. The prosecution of senior figures from Hasina's government is a key demand of several of the political parties now jostling for power. The interim government has vowed to hold elections before June 2026. The hearing is being broadcast live on state-owned Bangladesh Television. Prosecutor Islam vowed the trial would be impartial. "This is not an act of vendetta, but a commitment to the principle that, in a democratic country, there is no room for crimes against humanity," he said. Investigators have collected video footage, audio clips, Hasina's phone conversations, records of helicopter and drone movements, as well as statements from victims of the crackdown as part of their probe. The ICT court opened its first trial connected to the previous government on May 25. In that case, eight police officials face charges of crimes against humanity over the killing of six protesters on August 5, the day Hasina fled the country.
Express Tribune
4 hours ago
- Express Tribune
31 dead in Israeli gunfire near aid site
Palestinian rescuers arrive in an ambulance to evacuate injured people after an Israeli drone opened fire on civilian gatherings near an aid distribution point in the central Gaza Strip. PHOTO: AFP Gaza's civil defence agency said Israeli gunfire killed at least 31 Palestinians near a US-backed aid distribution site on Sunday. Israel has faced growing condemnation over the humanitarian crisis in the war-ravaged Gaza Strip, where the United Nations has warned the entire population faces the risk of famine after no aid was allowed to enter for more than two months. Israel recently eased its blockade and introduced a revamped aid mechanism in cooperation with a newly formed US-backed organisation, bypassing the longstanding UN-led system. The organisation, the Gaza Humanitarian Foundation (GHF), says it has distributed millions of meals since operations began last week, but the rollout has been marked by chaotic scenes at the limited number of distribution centres, as well as reports of casualties from Israeli fire nearby. Civil defence spokesman Mahmud Bassal told AFP that "31 people were killed and more than 176 injured... after Israeli gunfire targeted thousands of civilians near the American aid centre in Rafah", in southern Gaza. AFP images showed Palestinians transporting bodies on donkey carts near the aid point as others carried away boxes and bags of supplies under the early-morning sun. Abdullah Barbakh, a 58-year-old Palestinian man, described "chaos" at the site. "The army opened fire from drones and tanks," he said. "I don't understand why they call people to the aid centres and then open fire on them." Near another GHF aid centre in central Gaza, AFP images showed rescuers evacuating injured people. Bassal reported one dead and dozens wounded there, again blaming Israeli fire. Sameh Hamuda, a displaced 33-year-old from northern Gaza, told AFP he had walked from Gaza City and spent the night with relatives near Rafah before heading to the aid centre around 5:00 am to wait among a crowd of people. "Suddenly quadcopter drones opened fire on the people, and tanks started shooting heavily. Several people were killed right in front of me," he said. "I ran and survived. Death follows you as long as you're in Gaza." At Al-Awda hospital in central Gaza, Umm Muhammad Abu Khousa told AFP her son was among those wounded near the other aid centre in Bureij.
Express Tribune
4 hours ago
- Express Tribune
A tax system built on evasion
Listen to article Those drafting the upcoming budget face a formidable set of challenges: the mammoth and still growing debt burden, the skyrocketing cost of living for the poor, and the seemingly intractable trade deficit, to name just a few. But by far the biggest challenge is the mismatch between income and expenses. This has led the government to run a perennial budget deficit. Of course, this is a situation that cannot continue forever. If the government were a corporation, it would have been declared bankrupt years ago. There are only two ways to address this problem: increase tax revenues or decrease expenses. On the latter, there's much the government can do to curb needless extravagance — think of the number of cabinet ministers it supports and their ancillary costs, or the number of MNAs and MPAs in our assemblies, whose presence or absence has zero impact on the country. But ultimately, cutting expenses is a game of diminishing returns. You can trim the fat only so far before you get to the meat. So, the solution to the budget deficit must rely on boosting revenues. And here lies the real problem. Pakistan is perhaps the only country in the world that gives its citizens the option to pay taxes — or not. We have a whole category of people called non-filers who can legally refuse to be part of the tax net. Only a slim — and some might say foolish — minority has opted to become filers, actually submitting tax returns. In an effort to improve tax compliance without broadening enforcement capacity, this filer versus non-filer distinction was introduced through the Finance Act 2013 under the Pakistan Muslim League-Nawaz (PML-N) government. It allowed the Federal Board of Revenue (FBR) to impose differential withholding tax rates on certain transactions — like vehicle registration, banking, and real estatebased on taxpayer status. This had several goals: encouraging non-filers to register and become filers, using third-party withholding as a substitute for weak enforcement, and generating quick revenue from high-volume transactions. Despite some early gains in revenue collection, the system created a host of negative consequences. It spawned a parallel economy which, rather than pushing non-filers into the formal system, effectively legalised non-compliance by allowing them to continue operatingalbeit at a higher cost. Instead of enforcing mandatory return filing, the government began collecting advance taxes from non-filers on transactions such as vehicle registration, bank withdrawals, and real estate deals. This turned non-compliance into a revenue stream. Many prefer to remain non-filers and simply absorb the higher withholding tax — it's often cheaper and less risky than formal registration. Cash-based and undocumented businesses continue to function outside the tax net, limiting the impact of broader economic reforms. A particularly troubling outcome is that filers often feel punished for their honesty, while non-filers continue with impunity. Filers face politically motivated audits, complex filing requirements, and penalties for minor errors. Non-filers avoid scrutiny altogether. This disillusionment fosters cynicism and erodes trust in tax authorities. Instead of encouraging compliance, the system paradoxically discourages it — especially when filers see no benefits in return for their transparency. Tax systems thrive on fairness and reciprocity. Yet this two-tier structure undermines both. Filers rarely witness improvements in public services or infrastructure proportional to their contributions, further dampening their motivation to comply. Knowing that non-compliance attracts no real penalty — beyond a slightly higher withholding rate — many make the rational decision to avoid filing. Certain sectors, like real estate and wholesale/retail trade, thrive despite being dominated by non-filers, making voluntary compliance appear naïve and burdensome. This split also introduces market distortions. Individuals and businesses structure transactions to dodge higher non-filer taxesusing intermediaries, splitting invoices, or underreporting. Genuine investors are deterred by sectors with high compliance burdens, creating a tilt toward low-visibility, low-regulation activities. Non-filers still invest in property— albeit at higher ratesfuelling speculation rather than productivity. While withholding taxes have boosted collection, actual compliance and accountability remain weak. The government may celebrate rising revenues, but much of it comes from advance taxes on non-filers who remain beyond the system's reach. There's been no expansion of the taxpayer base. Withholding doesn't equate to documentation or broader participation. Worse, the administrative burden has increased. Focusing on transaction-based tax grabs distracts from building institutional audit and enforcement capacity. This system undermines progressive taxation. A core tenet of modern tax policy is that those who earn more should pay morea principle weakened by our current regime. Withholding taxes are levied regardless of an individual's ability to pay, hitting poor and low-income non-filers hardest. Since non-filers are taxed per transaction, not income, the regime becomes regressive. Equity is eroded. The wealthiest often remain outside the net entirely by structuring their finances to avoid detection. Finance Minister Muhammad Aurangzeb has called the upcoming budget a "structural budget" — implying fundamental reforms are on the table. If he truly intends to walk the talk, he must begin by scrapping the non-filer category. It's iniquitous and untenable. But this alone won't suffice. The FBR's enforcement capacity must be enhanced to manage a larger filer base. Digitisation must also accelerate. Cashless, online transactions should be made mandatory. AI can automate many functions — like audit selection — that currently rely on human input. These reforms will take time, but eliminating the non-filer status can happen immediately. It's the necessary first step, and it alone could significantly boost revenues and help reduce the chronic budget deficit that continues to haunt the country. THE WRITER IS CHAIRMAN OF MUSTAQBIL PAKISTAN AND HOLDS AN MBA FROM HARVARD BUSINESS SCHOOL
