Shaheer Ahmed
The startups in Pakistan have seen a boom. Last year saw the most fruitful raising $375 million. Foreign startups have also started showing interest in investing in Pakistan. Seeing the trend, Dragoneer Investment Group and Tiger Global Management have already made their investments in the last few months. Egyptian Paymob comes to Pakistan and is going to be operational soon after seeing the funding frenzy.
Paymob is an Egyptian startup based in Cairo. It allows online businesses and offline merchants to send and accept payments. It currently operates in Egypt, Jordan, and Kenya and intends to start in Saudi Arabia as well.
Paymob had started seven years back. It aims to “impact the ecosystem by empowering MSMEs across all Pakistani cities with online and physical-digital financial solutions, to manage and grow their businesses.” The CEO and co-founder of Paymob Islam Shawky told that they focus on SMEs as they were the cornerstone of the economy.
He said: “We are very excited to be launching Pakistan. This comes as an essential step after our successful journey in leading the Egyptian payments landscape where we enable tens of thousands of merchants with innovative financial solutions. Paymob operates with a concrete belief that SMEs are the cornerstone of every economy and enabling them automatically reflects on the country’s digital economy.”
According to a research paper Small and medium-sized enterprises and economic growth in Pakistan: An ARDL bounds cointegration approach by Faiza Manzoor, Longbao Wei, and Mahwish Siraj, “SMEs have drawn the attention and interest of policymakers and academics for decades; however, there is still a dearth of research analyzing SMEs and economic growth in developing countries and Pakistan particularly. Clearly, there is a strong need to examine the current state of the SME sector in Pakistan and it is therefore important that the necessary factors for this growth be implemented in time to prevent the worst from occurring in the future. Therefore, the evaluation of SMEs and their effect on economic growth and the quantification of their relative effects will have important implications for the development and management of SMEs in the future. Like other developing nations, Pakistan’s economy also relies on the SME sector. The SME sector is acting as a major part of economic growth, the advancement of technological innovation, promoting economic renewal, and sourcing to large firms and social progress.”
It also states, “They can be developed in urban as well as rural areas for any form of business operation. The establishment and development of such kinds of enterprises are generating income, employment, and alleviation of poverty. Subsequently, employment generation by SMEs promotes economic development in remote areas. In Pakistan, SMEs constitute nearly 90 percent of entirely private businesses and employ almost 78 percent of the non-agricultural labor force. In developing countries, the SME sector is facing a range of challenges, such as lack of capital and financial opportunities, loans with high-interest rates, inadequate infrastructure and unavailability of modern technology, weak trade, and investment opportunities. It should be noted that there are barriers to the growth of SMEs, but they also have a major role to play in increasing employment levels and improving people’s socio-economic conditions and living standards.”
This research clearly shows the market gap in Pakistani SMEs which fortunately have been able to capture by Paymob. Seeing the significant opportunity in Pakistan, it plans to have 100,000 merchants in its first two years. According to Islam Shawky, “Our focus is small and medium enterprises that are a cornerstone of the economy but underserved. There is a huge gap in emerging markets. Pakistan’s digital payments are low with just over 80,000 POS terminals and less than 3,000 e-commerce gateways.” The company also plans to extend its tap-on-phone payment service in Pakistan which has been recently introduced in its home market with MasterCard Inc.
Such investment will help Pakistan in addressing a lot of issues that are hampering its economic growth despite having opportunities.
