Pakistan’s telecommunications transformation is one of the country’s major economic and technological achievements of the past two decades. In 2010, Pakistan crossed 100 million mobile subscriptions. A once-scarce service became accessible to millions. Competition expanded, private investment built networks, prices fell, and coverage moved far beyond the major cities. This was a collective achievement of the telecom industry, the Pakistan Telecommunication Authority (PTA), government policy, investors, and consumers. The revolution then moved from voice to data. Today, Pakistan has more than 200 million telecom subscriptions and over 150 million broadband subscriptions. The telecommunications highway was built. The harder question is what Pakistan has done with it. Connected, but not sufficiently productive Connectivity is a means to economic transformation, not its final measure. The World Bank defines a thriving digital economy in terms of job creation, innovation and the integration of data-driven solutions across the wider economy. On this wider test, Pakistan’s achievement is less convincing. The evidence is striking. The UNDP National Human Development Report 2024 found that 93. 2% of respondents reported using the internet for entertainment, compared with 24. 5% for work or business and 11. 9% for education and learning. Only 4. 7% reported accessing public services, while income-generating use was even lower: content creation at 3. 4%, e-commerce at 2. 4%, and freelancing at 1. 9%. The gap begins even before productive use. GSMA’s 2025 assessment reported that mobile broadband covered 81% of Pakistan’s population, but only 29% used mobile internet, leaving a 52% usage gap. The weakness extends to government. The UN E-Government Survey 2024 ranked Pakistan 136th, with an EGDI score of 0. 5096, compared with Singapore’s 0. 9691. The problem, therefore, is no longer simply whether Pakistanis are connected. It is what that connectivity is being used to accomplish. Pakistan has become a highly connected society without yet becoming a comparably digitised and productive economy. Pakistan connected people much faster than it connected them to productive digital activity. International experience shows what changes when connectivity becomes economic infrastructure. India linked digital identity, bank accounts and interoperable payments at scale. According to the World Bank, its Unified Payments Interface (UPI) connects around 430 million accounts and 70 million merchants and accounts for more than three-quarters of India’s retail digital transactions. In 2022 alone, UPI processed 74 billion transactions worth about $1. 5 trillion. The economic value extends beyond replacing cash. Digital transactions reduce transaction costs, create financial histories, bring businesses into the documented economy and can improve access to formal credit. A small retailer who becomes digitally visible also becomes easier for banks to assess and finance. Estonia demonstrates the public-sector productivity dimension. OECD analysis reports estimate that digital signatures alone generate time savings equivalent to around 2% of GDP annually. Digital government therefore produces economic value by reducing the time and cost citizens and businesses spend dealing with the state. Singapore illustrates what happens when digitalisation spreads through the wider economy. Its Infocomm Media Development Authority reported that the digital economy reached 18. 6% of GDP in 2024, up from 14. 9% in 2019. More importantly, over two-thirds of that value came from outside the ICT sector, particularly finance, wholesale trade and manufacturing. Pakistan must recognise this distinction. A mature digital economy is not simply a larger telecommunications or IT sector. It is an economy in which digital technology raises the productivity of businesses, government and the wider economy. The next stage was recognised early. Pakistan did not fail to understand this transition. Much of the agenda was already visible more than fifteen years ago. During 2008–12, policy and regulatory discussions were moving beyond voice and network expansion. PTA and the State Bank of Pakistan worked on mobile-banking frameworks, including a joint regulatory mechanism. Work was undertaken on e-commerce infrastructure. Local-language content and applications were promoted, while mobile applications for education and agriculture were explored. The Universal Service Fund was extending broadband into underserved communities, including educational and community broadband centres. The agenda increasingly included e-government, e-health, e-education, e-agriculture, mobile banking and local applications. In 2010, an international expert forum in Islamabad examined “more-than-voice” applications in agriculture, health, payments and government services. By early 2012, the policy language explicitly spoke of moving from an infrastructure-based to a knowledge-based economy through localised content and applications. Yet, more than fifteen years later, Pakistan is still strengthening many of the foundations required to connect identity, payments, government data and end-to-end public services. The cost of this delay is economic, not merely technological. While Pakistan continued expanding connectivity, countries that integrated these components more rapidly converted them into digital transactions, financial inclusion, efficient public services and wider productivity gains. The World Bank’s Pakistan Development Update 2025 still identifies regulatory and institutional enablers, leadership ownership and coordination across governments as critical to realising these benefits. The problem, therefore, was not an absence of digital vision. Pakistan failed to sustain, integrate and scale that vision at the required speed. In a fast-moving digital economy, lost time means lost economic opportunity—and fifteen years is a long time for others to move ahead. The missing digital economy Pakistan now possesses important digital rails. NADRA provides extensive identity infrastructure. Branchless banking has expanded. Raast provides an instant-payment system. But the economic value comes from connecting these components and enabling end-to-end transactions. An online government form delivers limited efficiency if the applicant must print documents, obtain manual verification, visit an office and wait for approval. An SME is not fully digital if it can advertise online but struggles to receive payments, demonstrate turnover, obtain finance or complete regulatory processes electronically. The test should be simple: can identification, application, verification, payment, approval and delivery occur as one digital journey? This is particularly important in government. Every unnecessary interface adds processing time and administrative cost. It can also create opportunities for discretion, rent-seeking and corruption. Technology should remove unnecessary administrative interfaces rather than reproduce them on a screen. Digitalisation also has a fiscal dimension. Electronic payments create transaction records. Digital invoicing documents sales. Integrated tax systems improve visibility. Data analytics can identify anomalies. Together, these mechanisms can strengthen tax administration and make concealment of economic activity more difficult. The same documentation can benefit businesses. A small enterprise with a verifiable record of turnover and cash flow becomes easier for a financial institution to assess. Transactions that strengthen tax compliance can also improve access to credit. For Pakistan, where informality and a narrow tax base remain structural constraints, digitalisation should therefore be treated as part of fiscal reform, not merely technology policy. Pakistan should stop treating the digital economy as a technology-sector agenda. It is simultaneously a productivity strategy, a fiscal reform, a public-sector reform and an export-competitiveness strategy. Technology converged. Pakistan’s institutions did not. Telecommunications, spectrum, broadcasting, banking and payments, identity, taxation, data, cybersecurity and digital government remain spread across multiple regulatory and administrative regimes. Technology, however, no longer respects these boundaries. A smartphone can simultaneously be a telephone, bank, television, marketplace, classroom and government counter. For a digital business, institutional fragmentation has an economic cost. Multiple permissions, overlapping or ambiguous regulations, different compliance requirements and unclear institutional boundaries consume time and capital. They delay investment, increase legal and compliance costs and create uncertainty over which rules apply. What government sees as separate regulatory jurisdictions, investors experience as the cumulative cost and risk of doing business. Other jurisdictions responded to technological convergence through stronger coordination or converged regulatory arrangements. This does not require merging every regulator. It requires regulatory interoperability: clear boundaries, coordinated decisions and, where possible, a single pathway through which businesses can obtain approvals without navigating government institution by institution. The Digital Nation Pakistan Act 2025 potentially changes this architecture. It gives the Pakistan Digital Authority a broad mandate to develop the National Digital Masterplan, coordinate governments and sectoral regulators, develop the digital-economy strategy, oversee digital public infrastructure and establish standards for data, AI and emerging technologies. Its real test will be whether this mandate reduces the institutional cost of digital business rather than adding another layer. PDA now has an opportunity to help close that gap. AI changes the equation. Artificial intelligence makes the unfinished digital-economy agenda more urgent. Its economic significance is not simply another generation of applications; it is its capacity to raise productivity. McKinsey has estimated that generative AI could add $2. 6 trillion to $4. 4 trillion annually across 63 use cases. More importantly, empirical workplace evidence is beginning to measure the effect. An NBER study of 5, 179 customer-support agents found that access to a generative-AI assistant increased productivity by 14% on average and by 34% among novice and lower-skilled workers. For Pakistan, this creates both opportunity and risk. The next phase of IT exports cannot depend principally on producing more programmers and freelancers to sell low-cost labour hours internationally. AI is increasingly able to assist with routine coding, testing, content production, customer support and administrative work. Competitive advantage is therefore likely to shift towards problem solving, AI integration, systems architecture, cybersecurity, data engineering, domain expertise and proprietary products. The old model sold hours. The emerging model will sell knowledge, solutions and intellectual property. The workforce implications are substantial. IMF analysis estimates that around 40% of employment in emerging markets is exposed to AI. Exposure does not mean 40% of jobs will disappear. AI will complement some workers while reducing demand for some tasks. But the direction of change is clear. Pakistan’s universities, engineering institutions, technical colleges and vocational training providers must respond accordingly. The objective cannot be to produce graduates who can write code or perform routine digital tasks. Training must increasingly combine AI, data, cloud systems, cybersecurity and automation with the capacity to solve problems in finance, agriculture, manufacturing, health, education and government. Pakistan needs graduates who can use technology to solve economic problems, not simply graduates who can operate technology. The public sector offers an equally large opportunity. AI can classify applications, identify missing information, translate forms into Urdu and regional languages, support voice-based interaction, answer routine questions and route complex cases to human officers. Combined with digital identity, interoperable data and electronic payments, it could help move Pakistan from digitised bureaucracy towards genuinely digital government. The justice system should also be part of this transition. AI should not replace judges or judicial decision-making. It can assist case management, document search and classification, transcription, translation, scheduling, procedural tracking and legal research. Faster administration of commercial, tax, property and contractual disputes would have direct economic value. An unresolved commercial dispute is not merely a judicial problem. It locks up capital, raises contractual risk and increases the cost of doing business. AI, however, cannot repair a badly designed process simply by being added to it. The process itself must be reconsidered first. From connectivity to productivity Pakistan enters the AI transition with an advantage it lacked at the beginning of the telecommunications revolution: much of the digital distribution infrastructure already exists. The country does not need to rebuild the highway. It needs to extract considerably more economic value from it. That requires completing and integrating digital rails, enabling end-to-end applications, reducing institutional fragmentation, strengthening trust and cybersecurity, documenting more economic activity and preparing the workforce for an AI-driven economy. Education policy, skills policy, digital policy and export policy can no longer be developed independently. The first revolution could be counted in SIMs and subscribers. The next should be measured through productivity, lower transaction costs, access to finance, documented economic activity, higher-value exports, government efficiency and better public services. Pakistan’s first telecommunications revolution connected the country. The AI revolution must now turn that connectivity into productivity. The article does not necessarily reflect the opinion of Business Recorder or its owners.
Pakistan connected millions. Why has connectivity not translated into economic productivity?
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