The Startup Ecosystem of Pakistan

As one of the most populous countries in the world, Pakistan’s economy has massive potential to grow. For this to happen, digitalization and successful startups will be a critical element. Recently, the digital infrastructure in Pakistan has seen improvement with a focus on the 5G spectrum auction for the 2022-2024 fiscal year. This came together with legal frameworks that regulate and promote digital payments, investment, and credit under the Digital Banking Policy (SBP). In addition, the government maintains Special Technology Zones offering several tax exemptions and incentives. Last but not least, the Companies Amendment Act (2021) has recognized startups in its scope and introduced a legal framework to them.
Pakistan has come a long way with its legal framework, but there are still some areas that require more clarity when it comes to taxation or incentives for domestic investments. The country’s turbulent political climate is not helping to create certainty and stable policies to boost the local startup ecosystem. A challenge for Pakistani startups is the absence of success stories and shut down of several startups such as AirLift due to a funding crunch. The country needs to come up with more ways of providing its startup ecosystems with qualified and trained personnel, as well as more funding.
The country has not yet produced its first unicorn, but we think this will happen soon if the startup scene recovers from the contraction of funding and continues to attract investment.