New Ways to Economic Growth By Furqan Kidwai

New economy, new ways. The country has not been as positive before as it is now. Despite the economic uncertainty, currency in free fall, and stock market crashing, people in general are upbeat about the prospect. On the professional side, all factors lined up smartly — the macro factors, as we call them, like mobile phone access, young population, etc. But the truth of the matter is that we are left behind. Not just in respect to our neighbours but also across the wider Asian region. Contrary to the popular belief around success stories in the technology space, we ought to overlook one critical common denominator in them. None of them are Pakistani companies.
Technology plays a much bigger role than what most perceive it to. Beyond just ending up with big market cap companies and the talk around unicorns, it creates wealth, direct and indirect employment, and brings positivity and hope in the atmosphere and in the youth in particular. The technology space has to succeed if we are to grow as a nation. It is not a matter of if, but when and how. The other option is slower growth, continued brain drain and our reliance on Facebook, Ubers, Googles and Alibabas of this world for essential services like transportation, financial services, and the media. But it has to be more than just talks. This government’s election manifesto talks about it. A few public entities talk about it. All financial institutions talk about it. But that is not what we need. We do not need more talk. Measurable KPIs is what is needed. All the talk is good, creating buzz is excellent but ultimately it will not yield results until all those talking are working towards a measurable outcome. As someone from the related but private sector, it is not very clear to me as to what is the end result we, as a country, are aiming for. Is it about the number of jobs created, venture capital invested, or the unicorns turning up? The outcome is not clear to me. To that end, I would like to propose a differentiated goal for us. The goal that is likely to propel us faster into the new economy. That is Pakistan’s stake in the top Asian technology companies. In other words, what percentage of the top technology companies in Asia is owned by Pakistani money — public institutions, taxpayers’ money, local corporates, etc. The main rationale behind this rather contrarian approach is twofold — one, transparency in measuring where we stand and what we ought to become; two, having our skin in the game will not only yield considerable economic gains but also provide us with some influence around bringing these companies to expand, invest and employ in Pakistan. Monetarily, the value of these companies will grow at an accelerated pace to that of the traditional companies of the old economy.
Imagine, if there was a Pakistani fund/entity that owned 15 to 20% of Careem, Souq, Go-Jek, etc. If this is what we agree to use to gauge Pakistan’s progress, we can track the growth of Pakistani ownership in the next generation of the wealthiest companies. And how the ownership is used as a leverage to get these companies to tap into Pakistan for operations and talent. The battle for the startup hub is an old one and the boat might have just sailed. But there is no regional hub for venture capitalists yet. Why not court some of the best venture capitalists in the world to take Pakistani money and expose it to some of the best companies in the new economy. We should be aiming for a tailored version of the Yozma model of attracting the best venture capital (VC) talent out there to help us propel our way into the new era. Some of the upcoming unicorns have already been identified. These will be the largest companies over the coming years. We should be getting our skin in the game. Court them with not just capital but also customers, with revenue streams large enough that they set up shops in the country. However, all this needs to be done within one window. There are numerous agencies working on SME, IT, technology affairs. And most have done decent work. But there needs a captain to direct the ship, a point of contact that is also responsible to delivery. It is too big an opportunity to miss. Last but not the least, we need to get past legacy ideas around how to encourage the growth of the tech sector. Tax breaks, etcetera are not needed. Who doesn’t offer them? The companies we should be going after are in the hyper growth phase and unlikely to turn a profit for the foreseeable future; for any tax break to be even mildly attractive. How about income tax breaks for people to work in these sectors? What about offering our talent at subsidised rates to high elite companies! We may as well get some of the top Asian companies to set up their shops here. Remember it is also a talent war and we need to think out of the box to win this.
Another important legacy item we need to move away from is that of accelerators/ incubators although they have so far done a decent job in creating the buzz. However, it takes a very long investment horizon, space for failure, a very high concentration of experienced mentors, and consistency in outputs to yield credible results. It would take much longer to get this right than going out courting high growth regional winners. Yes, accelerators and incubators do create media buzz and the ‘feel good’ factor. The immediate results, however, are more likely to come from going after the latter. To put it simply, is it the massive operational launch of ride-hailing apps and its hiring that has made technology a lot more mainstream in the past few years or simply churning startups out of incubators/ accelerators? You get the point here. Getting this right will change the destiny of Pakistan. I do not want to quote that same chart doing the rounds for months comparing market capitalisation of top 10 companies from 15 years ago to those of today. But that is the reality. The richest and largest companies, today, are from the tech sector. And this only happened within the last decade or so and not 100 years. If Pakistan does it right and gets on the wave of the new industry, our next few generations will be eternally grateful. A lot of small things have been done in the past few years. Too many cautious steps have been taken. It is time for a new and bold approach. To propel us into the new economy.
Published in The Express Tribune, December 13th, 2018.

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