By Gholam Mustafa
Pakistan’s digital economy is facing a severe crisis due to the ongoing political instability and frequent restrictions on social media, the internet, and VPN access. These measures are significantly impacting the country’s economy, particularly the tech, freelance, and IT sectors, which rely heavily on digital connectivity. The repercussions are far-reaching, with businesses, freelancers, and even the education sector bearing the brunt of these disruptions.
Frequent internet shutdowns have dealt a major blow to businesses that depend on online operations. E-commerce platforms, digital marketers, and companies with global reach have experienced significant losses as internet blackouts disrupt customer access, delay transactions, and even lead to cancellations. Financial services, including online banking and mobile payments, also suffer during these outages, leaving users frustrated and undermining trust in the system.
This unstable environment is deterring both local and foreign investors. In today’s interconnected world, businesses seek reliable infrastructure and free information flow to support their operations. However, Pakistan’s unpredictable internet access and political uncertainty are eroding investor confidence, leaving the economy vulnerable. The workforce, particularly in urban areas, is similarly affected. Employees who rely on digital tools for communication and collaboration find their productivity hampered, leading to missed deadlines and reduced business revenue.
Educational institutions, which increasingly rely on online platforms for teaching and examinations, are also caught in the crossfire. Interruptions in internet access disrupt learning, hinder exams, and limit the development of future professionals, thereby weakening the country’s human capital potential.
The impact on freelancers and the IT sector is particularly alarming. Pakistan has one of the world’s largest freelance communities, excelling in fields such as IT, digital marketing, graphic design,
and content writing. Freelancers depend on a stable internet connection to communicate with international clients, meet deadlines, and maintain their professional reputation. However, frequent shutdowns lead to project delays, canceled contracts, and income loss. Limited access to payment gateways during such disruptions further exacerbates financial challenges.
Similarly, the software development and IT industry, a growing contributor to Pakistan’s economy, is struggling to maintain its momentum. The sector thrives on global collaboration, often utilizing platforms like Slack, Zoom, and GitHub for international projects. Interruptions in internet and VPN services disrupt these activities, affecting client acquisition and contract retention.
Beyond the immediate economic impact, these challenges are fuelling a brain drain among the country’s educated youth. Political instability, coupled with restrictions on digital freedoms, is prompting skilled professionals in IT, engineering, and business to seek opportunities abroad. Countries such as Canada, Australia, and the UAE are emerging as popular destinations for Pakistani talent, leaving behind a widening gap in leadership, innovation, and skilled labor. Entrepreneurs reliant on digital-first business models, such as tech startups, also find it increasingly difficult to thrive in such an environment, further compounding the problem.
The economic implications of this talent exodus are profound. With a shrinking workforce and reduced capacity for innovation, Pakistan risks economic stagnation and increased dependency on foreign aid and remittances. The freelancing and IT sectors, which collectively generate billions in foreign exchange annually, are particularly at risk. Freelancers alone earned approximately $1.1 billion in 2023, while the IT and BPO sectors contributed around $2.6 billion to the economy. These sectors’ growth potential is now jeopardized by the government’s restrictive policies.
To address this crisis, the government must take immediate and strategic action. The practice of shutting down the internet, social media platforms, and VPNs should be discontinued to restore business continuity and public trust. Any restrictions deemed necessary for national security must be temporary, transparent, and subject to judicial oversight, with clear legal frameworks defining their scope and duration.
The government should also allow VPN use for legitimate business purposes. If concerns over foreign VPNs persist, local service providers can develop secure, state-approved alternatives that ensure privacy while enabling global communication. Robust data privacy laws are essential to protect citizens and businesses, reassuring international stakeholders of the country’s commitment to a secure digital ecosystem.
Simplifying cross-border payment processes and building reliable infrastructure for international transactions can further enhance the digital economy. Engaging with IT industry leaders, digital rights advocates, and business communities will ensure policies align with the sector’s needs, fostering growth and resilience. Encouraging the free flow of information is equally critical to strengthening Pakistan’s competitiveness in the global economy, with restrictions on media and digital tools limited to exceptional circumstances.
The solution to Pakistan’s digital economy crisis lies in creating a stable, open digital environment while addressing security concerns in a balanced manner. Immediate interventions, combined with long-term planning, can modernize governance, improve infrastructure, and empower the youth. By fostering innovation and economic growth, Pakistan can secure its place as a leading player in the global digital economy and build a brighter, more prosperous future. (The Writer is a Karachi-based columnist).
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