As originally published in Synergyzer Issue 3 – 2018
Question: First of all, congratulations on being appointed the UNESCO – United Nations Educational, Scientific and Cultural Organization Chair for ICTD – Information and Communication Technologies and Development. Please tell us more about that.
Dr. Umar: Around 8-12 years ago, me and a group of people, started the field of ICTD. We have made it mainstream in computer science to a point that now there are several ICTD professors hired and even tenured.
The 10th installment of the ICTD conference was organized in Pakistan. The goal of the conference is that the work we do should be introduced to the world so that other people can benefit from it. This was the first large computer science conference that was organized in the country, we had 2,200 people visiting from all over the world to participate in this conference. I was the General Chair for the conference, so Pakistan is very much on the world map of ICTD.
Establishing this [ICTD chair] in Pakistan is an important milestone for us. You have to apply for this, and it is in collaboration with 4 universities worldwide: Carnegie Mellon University, University of Washington, Seattle; United Nations University – UNU, and University of Michigan and Harper. The ICTD chair in Pakistan is UNESCO’s third chair in this area, the others are in Africa, Addis Ababa and University of Royal Holloway, UK. We are now part of this global community of UNESCO chairs.
Although I am the chair, it is not about one person, there is a group of around 20 people who constitute the ICTD chair in Pakistan. The research center thus constituted becomes a part of the program, so faculty members from ours and other universities, research associates, students, they are all a part of it.
Question: What will your scope of development be and what will you be addressing as a priority, having collaborated with these universities?
Dr. Umar: The ICTD chair was awarded to us in recognition of our work in meeting sustainable development goals in health, especially improving vaccination coverage and education.
We are also bringing technology into the agricultural sector. Before now, we had no way of measuring the expected yield of cotton, and how much of the cotton crop is damaged or destroyed in Pakistan. For the past two years, we have been working on an advanced system that can measure the yield prediction of crops based on satellite imagery analysis. A multi-spectral satellite image can tell you what crop should be planted where, and what will be its predicted yield.
A part of my group is now working with Water Scarcity in Agriculture – WASAG. Their work in agriculture includes making low-cost systems to automatically detect where it has rained, where there is water-bonding, where the water is becoming salty, how much water is there in tail canals etc.
We are also working in the education sector where we are trying to introduce technology in classrooms by digitizing all the educational material and using tablets for teachers.
Hence, we are working on several projects in public health, clean drinking water, education, agriculture, irrigation etc. We hope to expand these projects to other countries in the future.
Question: What has PITB achieved so far?
Dr. Umar: PITB has done quite a lot. We digitized Punjab’s entire land revenue record, and the land ownership system thus removing the patwari system. We computerized 57 million rural land records, creating 151 data centers in the process and linked them to 4000 NADRA centers. Due to this, around 8 million people have been added to the system and around 4.4 million property transactions have occurred. Due to the introduction of electronic stamp papers, backdated stamp papers can no longer be used and as a result, property fraud has gone down. Around PKR 71 billion worth of electronic stamp papers have been sold, which is 39% more than last year, essentially plugging around PKR 10 billion worth of fraud.
We have digitized all of Punjab’s police stations where about 2.1 million computerized FIRs have now been logged. We have also digitized the complete criminal record. We have also digitized Sindh’s police stations, allowing us to link systems for both provinces. We also deployed KPK’s counterterrorism system.
Our advancements in vaccination coverage, skilled birth attendants and access to medicine are happening at a rate that is unparalleled anywhere else in the world. The geographic coverage for vaccination coverage in Punjab has increased from 25% to 88%. The coverage for DPT3 vaccine has increased from 54% to 97%. Hospital staff attendance is now done via a biometric system which has led to a rise in attendance from 53% to 87%. The automated inventory system in hospitals has improved medicine availability by 25%.
We have automated systems such as the case flow in the High Court, and the metro buses in Lahore. So now, an Oyster Card or a token can be used on the metro bus instead of having a conductor, there is no pilferage. This automation allows us to track how many people sit, how many people are coming, what the revenue is etc.
Hence the impact PITB has had is institutionalized and irreversible, so we have achieved quite a bit and are aiming to do more.
Question: Neighboring countries like India and China have already established a niche in the software industry. How do you think Pakistan can compete in the global marketplace?
Dr. Umar Saif: Pakistan’s total software export is around USD 2.5 to 3 billion. However, according to the State Bank, only USD 700 – 900 million come to Pakistan through formal channels. On the other hand, India’s software export is around USD 164 billion.
Pakistan’s external debt used to be around USD 80 billion which is equal to the market cap of just one of India’s companies, Tata Consulting Services. This goes to show how far behind Pakistan is. However, this is not due to a lack of talent.
Pakistan has a lot of engineering talent. Pakistan’s engineering universities produce 25000 engineers each year, of which 20000 are Software and IT graduates for whom we only have 10000 jobs available. Pakistan’s rapidly expanding marketplace has 5200 IT companies, of which 800 – 900 are registered with PSEB – Pakistan Software Export Board. So it’s a large number, it’s a large industry.
The only reason Pakistan lags behind is our complicated security situation. Due to this, most people did not want to travel down to Pakistan and work with software companies here, while Indian companies such as Tata Consulting Services, Infosys, Vipro, expanded very quickly. India’s biggest companies expanded enough to employ 300,000 – 350,000 people, whereas Pakistan’s biggest software house employs only 600 – 700 people.
Another factor playing a major role in the current situation of our IT industry is that Pakistan’s universities have only recently started teaching IT. Whereas, India’s IT institutes, like the Indian Institute of Technology, have been operating for much longer and have produced CEO’s for some of America’s biggest companies such as Microsoft and Google. Our traditional universities did not give much importance to IT education, so the country did not get skilled manpower at the right time. On top of this, I don’t think we had the tech entrepreneurs that were needed to expand a company from 600 – 700 people to 350,000 people.
Question: Can you tell us about the evolution of the current startup trend in Pakistan?
Dr. Umar: PITB has and is still playing a big role in enabling startups. But let me give you some background.
Before I came to Pakistan, I was affiliated with 2 – 3 startups which were quite successful. After coming to Pakistan, when I was a professor at LUMS, I conducted research with students that often led to the development of successful commercial applications.
However, it was always difficult for students and fresh graduates to work on startups. They don’t get a stipend; they have to cover travel expenses, the infrastructure costs including office space and furniture, electricity, computers, internet etc. That makes it very difficult for fresh graduates to do startups.
In 2007, I started the first private startup incubator in Pakistan called the Saif Center of Innovation to help startups. It was located in a big, empty building that my father owns. We did 3 – 4 startups there and all of them became quite successful. It was created at a time when there was no such trend and I had limited private resources to expand it.
In 2011, when I started working for the government I decided to scale this. We started the government-backed incubator called Plan9 on the 9th floor of Arfa Technology Park in 2012. In 5 years, over 160 startups have graduated from Plan9. Collectively, these companies — such as Patari, Mangobaaz, Markhor, Xgear — are worth several billion rupees and have created over 1,200 jobs.
These kids changed their futures themselves by using their innovations to establish successful startups. One lesson I have learned is that if you invest in the youth of a country, they never disappoint you and this was our investment in the youth of this country. All we did was provide them with the infrastructure and a stipend, taught them how to run startups, and let them work.
Plan9 is on a much smaller scale compared to other more expensive projects of the Punjab government, yet it escalated and became the pioneer of tech incubation in Pakistan. In the beginning, people inside and outside the government thought that this project would not be fruitful and had no purpose. They would criticize us, telling us to help big IT companies because they felt startups would not be productive. I remember when we did the first launch pad; even the entrepreneurs who were going to join the incubator did not believe that this would be a success. But it became so successful that now the entire country is working in this area.
We now have 17 – 18 startup incubators in Pakistan. Using this model the Federal Government created National Incubation Centers (NIC), of which currently 3 – 4 centers are operational and being given some support by the USA government. Whereas our board members, Jahan Ara founded Nest i/o sponsored by Google while Khurram Zafar launched a similar incubator at LUMS. Now there is more activity in this space. I am very happy that we were one of the first ones to cast the die. The important thing is not what the incubators are doing, but the fact that these entrepreneurs are thriving with successful ventures.
Question: How will the change in governance affect PITB? What will be the effect of any cuts in spending on the achievement of objectives? How will you deal with it?
Dr. Umar: Punjab IT Board is not a very expensive child of the government. Our annual recurring budget, which runs our entire institution, is only 0.03% of the government’s annual recurring budget, even adding our development expenditure only increases it to around 2%. I do not see any rationale for cutting the budget since it is already so small.
This organization’s main purpose used to be contract management: PITB used to take government projects and then outsource them. We have now hired our own software developers, carrying out most of those projects in-house.
Here, no one has a pakki sarkari nokri. All 1500 people at PITB work on a 1-year renewable contract. Yet people’s salaries are 20% – 30% less than market salaries. We have people working for us for around PKR 200,000 to 250,000 who would otherwise be making around PKR 600,000 – 650,000 if they would have been employed in the private sector. So essentially, there is no reason to cut PITB’s budget.
We don’t just operate in Punjab – we work across provincial boundaries, we are working with 7 countries, we have also worked with the armed forces and the Federal Government on several projects.
This is a large organization that is deeply embedded in the government. PITB has several large-scale strategic projects under its belt. These include automating the Hajj process, police stations, hospitals, schools, stamp papers, data centers, the High Court system, as well as the land ownership system so that people do not have to go to patwaris anymore. So I think PITB does not need to worry about budget cuts.
Question: What are the short-term and long-term objectives of PITB in terms of promoting entrepreneurship and innovation?
Dr. Umar: PITB has established a startup culture that has permeated beyond Plan 9. Our primary goal was to introduce a culture of tech entrepreneurship in Pakistan, and we have been largely successful in that, since the country now has several operational incubators.
The second phase was to set up an accelerator so that the startups that are being incubated can grow their business further. For that, we established PlanX.
The next goal is to provide capital to these startups; risk capital, private capital, accessible growth capital. Once they are incubated and accelerated, they need further capital to grow.
Pakistan has only recently started attracting venture capital and private equity, and they have begun to invest in startups. Our goal is to promote venture capitalism and set up investment funds further so that the startups can make an exit.
The Government of Punjab is going to set up a technology innovation fund of about USD 3 million. The goal of the fund would be to invest directly in startups and encourage the private sector to do the same. A National ICT R&D Fund is doing similar work.
I am part of this TV show also, called Idea Croron Ka, where we make investments on live TV. The goal is to glamourize startup culture and make investment in startups mainstream.
We have also signed a contract with the Pakistan Stock Exchange so that small-cap companies worth around PKR 200 million can be listed there and exit financially. IT companies can raise investment by listing their stock, or be acquired by major companies.
The end goal is accelerating Pakistani startups to become unicorns* like Ali Baba, Uber, and Careem. I think we are making good progress there.
*A unicorn is a privately held startup company valued at over USD 1 billion.
Question: How are you extending your expertise in entrepreneurship and innovation to other provinces?
Dr. Umar: The government’s job is to catalyze so that other people pick up the trend automatically. Some of this has happened organically, there are now several incubators operational in the public and private sector.
Our contributions to other provinces have also been tangible. We recently signed a Memorandum of Understanding – MoU with the Sindh IT minister to build and help manage two incubators which they are sponsoring themselves. One will be built at IBA, Karachi and the other at Sindh University, Jamshoro. We will also be facilitating an incubator that has been setup at Balochistan University of Information Technology, Engineering and Management Sciences (BUITEMS).
Another project we are working on is e-Rozgar centers. We know high-tech entrepreneurship creates wealth; a company of 20 can be worth a billion dollars, however, this does not lead to a lot of jobs and our country needs more jobs. So we have created 40 e-Rozgar centers in Punjab where we provide awareness, knowledge, and training to students and graduates to become online freelancers so that they can easily earn on global platforms such as Upwork, Crossover, Fiverr, Amazon Mechanical Turk etc. These centers are helping them establish themselves as professional freelancers.
Till now, people have earned around USD 150,000 in these 40 centers. Our highest earner has made around USD 7,000. Our goal is to train 10,000 people this year, and if each person makes USD 30 per day, they will add a billion dollars to Pakistan’s economy every year. Currently, Pakistan’s entire export is USD 21 – 22 billion. If 1 million people are trained to become freelancers, the country would make USD 10 billion in exports, essentially improving our economy by 50%.
We aim to equip our youth with skills so they can make money online in this trillion dollar economy where everything can be outsourced.
Question: And are you introducing any kind of policies to encourage more people to come towards freelancing?
Dr. Umar: Pakistan has about 150,000 freelancers and thus stands third in the world in terms of the number of freelancers. They make a yearly income of about USD 850 million to USD 1 billion.
One of the biggest issues freelancers in Pakistan face is the difficulty in taking payments from abroad, especially due to the unavailability of PayPal in the country. People use alternatives such as Western Union etc. Although AliPay has made it easier to collect payments, certain issues still exist.
Freelancing is about selling services; these payment issues affect all sectors with online trade-based operations, including the e-commerce sector, where it is difficult to sell anything internationally.
We are working to bring down those barriers. The federal government has made a digital policy, the commerce ministry is making an e-commerce policy, and we have recently announced Punjab’s IT policy; this way we have structured ourselves to increase connectivity. We have reduced trade barriers to promote e-commerce, and are trying to remove the digital divide. We are in the process of setting up taxation policies for the IT sector which enable them to grow.
So the entire jigsaw is finally falling into place, and we take some credit for doing advocacy to bring all stakeholders together.
Question: What are the long-term and short-term objectives of the Digital Pakistan Policy 2018?
Dr. Umar: There are several policies that need to fall into place. The Federal Government has the power to control export taxes, which they have currently waived up to 2023. The provincial governments need to regulate sales tax.
Improving the taxation policies and regulating the sales tax structure; removing the currently existing multiple layers of taxation, will lead to increased outsourcing and allow IT companies to grow more easily.
Similarly, the commerce ministry is taking the lead on forming an e-commerce policy. Current policies make it unclear as to which and how many government bodies should be collecting the taxes: would the imposed tax be based on where goods are manufactured, where they are sold, where the buyer is, where the website is operated or something else?
The State Bank needs to make an extra effort to make financial instruments such as PayPal available in Pakistan by introducing necessary regulations.
The Provincial Governments can create software economic zones where companies can get tax breaks, utilities are subsidized, and facilities are present so IT companies can grow rapidly.
Public Procurement Regulatory Authority’s (PPRA) procurement policies need to be changed so that rather than outsourcing projects to the lowest bidder, we give preference to minority-owned or women-owned businesses, or SME’s, allowing them to grow.
Likewise, the Federal BOI (Board of Investment), and PBIT (Punjab Board of Investment & Trade) have taken the lead to explore how we can raise investment funds like pension funds, EOBI’s etc. via mutual funds, Mudarbas and Islamic Funds. We are encouraging major financial institutions in the private sector to set aside a small percentage of their investment funds for technology-oriented projects. In other countries, this has happened via policy instruments rather than the government’s own funds. If a similar mandate can be followed here, we will see a boom in our IT sector.
Question: Are you engaging private sector companies to understand the importance of the IT and ITES (Information Technology Enabled Services)?
Dr. Umar: Entity Resource Planning (ERP) is being used in Pakistan in some sectors such as textile, cement, or sugar; but industrial automation, IOT (internet of things), big data or similar technology is hardly being utilized. Technology will make entire sectors much more efficient and transparent and has the ability to benefit the entire country, bringing them at par with the global market.
Currently, in major sectors such as dairy, only 3% to 5% of the milk produced is utilized effectively, the rest goes to waste. Similarly, few of the agricultural sector silos are automated, which makes the industry inefficient.
Since we are still in the initial stages of establishing IT and ITES in the country, we have not gone on to cater to this area yet. Although, the use of technology can be enforced via regulatory authorities and hand-holding some of the industries through the process.
Question: According to the Jazz-Veon report on Digital Entrepreneurship Ecosystem in Pakistan 2017, less than 2% startups in Pakistan are successful, the reason was cited is a lack of entrepreneurial approach which is more of a mindset challenge.
Dr. Umar: I do not think that is accurate. The success rate in Silicon Valley is 2%, there is no shortage of entrepreneurial mindset there. We just have to continue to do it at a large scale, and eventually, we will see success stories.
Plan9’s success rate is 59%, which means the graduates of the program have thriving businesses, some of which are now household names like Daastan, Patari, MangoBaaz, XGear, Wifi Gen, Travely etc. Besides these, Rozee, Finja, SimSim etc. are also technology-driven companies that have been around for a while which were established here.
This success, even with limited resources, is a testament to how driven Pakistani entrepreneurs are. And such high rate of progress is generally not seen in many countries. Our issue is just that startups were not common before we started the trend 5 years ago. At the rate tech incubators are being created in the country right now, we are approaching a tipping point where we expect to see 4 – 5 international firms come to Pakistan to acquire startups. Once major corporations come in for acquisitions, the rest will follow.
Question: In an interview for Forbes, you said that while teaching at LUMS you came across students whose potential was equal to the potential of MIT students, but they did not realize it. What was missing?
Dr. Umar: While the quality of students was great, awareness was the main issue. The faculty was happy with publishing at second tier places, they or even the students did not know that they could publish at world-class journals, do their own startups, or go to a world-class university. Although, despite this lack of awareness, students I worked with at LUMS wrote research papers and created successful startups. This work earned me the recognition of being one of the top 35 young innovators in the world, and it was all done in Pakistan.
Now that students have more access to knowledge and awareness, we have more professors working with students and more startups.
I remember, at MIT, I would have to carry my laptop, projector and projector screen to lecture halls, in the winter this would mean plodding through 3 – 4 feet of snow. On the other hand, in Pakistan, we have a beautiful infrastructure and resources are readily available. The lack of belief is our only obstacle, without that people will succeed.
There have been several notable startups from small countries: Skype came from Estonia, Nokia came from Finland. This just shows that if we invest in the youth of our country, we can have successful startups as well.
Question: When we talk about venture capitalists and Asian investors there is a risk that their idea might be usurped by the investor. What are the policy measures for this?
Dr. Umar: Currently, Pakistan does not have a law that serves small startups. For example, if two kids create a product that attracts a major investor who offers his stake for USD 5 billion in the company, and in return takes 90% equity leaving the entrepreneurs with 10%, they lose the incentive to innovate, destroying the company in the process. Similarly, the company cannot thrive if the entrepreneur’s intellectual property is usurped. We do not have any existing laws that can protect startups in such deals. Hence, Pakistan’s company law needs to change and recognize sweat equity and venture capital deals.
Investors are now starting to realize that they can earn from tech projects but they also need to mature up and understand that if the entrepreneur succeeds then they succeed as well. Although, if Pakistani investors do not learn quickly, they will eventually be driven out of the business by people who actually incentivize the entrepreneur.