Covid-19 boosts digital economy, e-commerce in Pakistan

SBP claims shift to electronic payments will stimulate trade, help the economy by 7%

Pakistan’s e-commerce and digital economy has received a huge sales boost during the current coronavirus pandemic as physical mobility of shoppers has remained limited.

In recent years, the country has made efforts to expand digitisation of its economy by promoting online businesses in a bid to boost exports and create jobs for young people, Arab News reported.

“We have received an overwhelming response… our data shows that online orders have grown nine times [since March],” said Muhammad Ammar Hassan, Chief Marketing Officer at Pakistan’s largest online shopping store. “We are experiencing 100% year-on-year growth in each item … and this has increased even further since March 2020 due to the coronavirus.”

The State Bank of Pakistan (SBP) claims that the shift to electronic payments would stimulate consumption and trade, helping the country’s economy by as much as 7%, creating 4 million jobs and boosting gross domestic product (GDP) by $36 billion by 2025, the report added.

Although the digital industry remains in the infancy stage in Pakistan, a steady rise has been seen in e-commerce transactions as well as in the number of registered e-commerce merchants, it pointed out. Sales of local and international e-commerce merchants in Pakistan almost doubled to Rs40.1 billion in 2018 compared to Rs20.7 billion in 2017, according to data of the Ministry of Commerce.

“These figures do not include all the postpaid and cash-on-delivery transactions, which account for 60% of the total value of e-commerce in Pakistan,” said Ministry of Commerce Joint Secretary Aisha Humera Moriani.

The government is also developing an international payment gateway that will be integrated with other online payment platforms like PayPal, aimed at facilitating incoming payments to boost exports and assist freelancers.

National Information Technology Board Chief Executive Officer Shabahat Ali Shah was of the view that Covid-19 had pushed back the development of the payment gateway but reaffirmed that the organisation will try its best to roll it out as soon as possible. Businessmen speculate the encouraging online sales figures will grow further if the government offered tax incentives and ensured regulation for Pakistan’s e-commerce platforms.

“The footfall on stores and shopping malls has declined up to 80% following the outbreak of coronavirus while the revenue of retail business has fallen to almost 25%,” said Chainstore Association of Pakistan Chairman Rana Tariq Mehboob.

Published in The Express Tribune, July 8th, 2020.