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Pakistan has launched ‘Raast,’ the country’s first instant digital payment system. This is the first time the Pakistani government has launched an initiative aimed at boosting government revenue in a country where keeping track of economic transactions is a challenge, owing to high dependency on cash.
Prime Minister Imran Khan launched the initiative during a press conference and termed the move a “big step” towards realising Pakistan’s full potential by way of taking complete advantage of the 220 million population. Addressing the ceremony, Khan said only 2 million people file their taxes, and so the country’s cash economy remains largely untaxed, all of which can now be changed through this digital payment system. He added that the digital payment system will create a gradual shift away from the cash economy to a point where the government can fully take advantage of the country’s large population.
What Will Digital Payment System ‘Raast’ Do For Cashless Economy?
The new instant digital payment system is called ‘Raast’—Urdu for direct or straight—and, as the name suggests, it will provide a direct way towards bringing more Pakistanis in the digital economy net. The project was announced under Digital Pakistan Vision 2019 and has been developed through multi-year collaboration between the State Bank of Pakistan and the Bill & Melinda Gates Foundation, with support from the World Bank, Britain and the United Nations.
The State Bank of Pakistan (SBP) says the framework will be rolled out in three phases till early 2022. Prior to the launch, the SBP announced that in the first step, instant credit of dividends from listed companies to shareholders will be initiated. Followed by digitization of the payments made to government employees in wages and pension. In a statement, Bill Gates said, “I hope that in years to come we will look back and see this new digital public good as an important contribution to our shared goal of giving all people the tools they need to lift themselves out of poverty.”
The state-of-the-art faster payment system can be used to settle small-value retail payments in real time while also providing cheap and universal access to all players in the financial industry, including banks and fintechs. This will serve as a direct connection between users located anywhere.
While various private-sector digital cash transfer systems exist in the country such as Jazz Cash, Zong Easy Paisa etc, this is the first system that links government entities and financial institutions. Khan added the automated collection of taxes on transactions and tightened rules on banking will help shift the country away from a cash-based economy and tackle corruption more efficiently, under an extensive policy framework of Digital Pakistan Vision 2019.
Apart from this, this move is aimed to boost the formal economy, increase the financial inclusion of women, and eradicate poverty from the country. This platform will increase the outreach of Ehsaas Programme and Benazir Income Support Program to the economically-isolated classes, especially women. Through this, women in rural areas can open their bank accounts and receive any cash payments from the government directly to improve their livelihoods.
Digital Pakistan Vision – What To Expect Next
In 2019, Pakistan launched its Digital Pakistan Vision with an aim of enhancing connectivity, improving digital infrastructure, increasing investment in digital skills, promoting innovation, and technological entrepreneurship. It is created to target five key areas: Access and Connectivity, Digital Infrastructure, e-Governance and Innovation and Entrepreneurship.
The first area, Access and Connectivity is aimed at creating a broader digital space for including more people; Digital Infrastructure provides the framework to govern how the digital space is regulated to provide for smoothing functioning. This is especially important these days as the untapped cyberspace creates the need for better governance practices. Meanwhile, e-Governance will ensure the interlinking of government departments and safe and more effective avenues of data sharing. As tapping the digital space remains an oddity, Digital Skills and Training will provide the necessary knowledge and skills to work in this environment effectively. Lastly, Innovation and Entrepreneurship will allow for an environment where startups can be introduced and sustained.
It is through newer means such as Roshan Digital Accounts that Pakistan has also seen a sharp increase in remittances by overseas Pakistanis. The latest data from SBP shows remittances from overseas Pakistanis during December 2020 have risen by 16.2 percent year-on-year to $2.436 billion, compared to $2.097 billion in December 2019. This is a persistent revenue of over $2 billion for the seventh consecutive month. All of this was possible under the Digital Pakistan Vision to provide formal channels of doing transactions.
Digital Pakistan Vision is the driving force behind the technological revolution of Pakistan’s economy. It is to provide the economy with the tools needed to move ahead, to gain a competitive edge in this modern era, and provide greater accessibility to the most vulnerable classes in society. Greater digitisation translates into greater accountability and streamlining of operations, which is what Pakistan wants to achieve.
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