Pakistani startups raise $85 million in 2021 with rush of foreign capital in fintechs 

This photograph taken on November 19, 2015 shows Pakistani employees of online marketplace company at work in Karachi. (AFP/File)
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Updated 13 June 2021

Pakistani startups raise $85 million in 2021 with rush of foreign capital in fintechs 

  • Internet platforms engaged in finance have fetched around $22 million, mostly in foreign funding, since January 2021
  • Increasing mobile phone penetration and growing young population are major attractions for foreign funding in Pakistani startups

KARACHI: Venture capitalists poured over $85 million in funding in Pakistani startups in the first five months of 2021, with fintech companies riding a wave of interest by overseas investors, according to data from Invest2Innovate Ventures, which supports early-stage enterprises in untapped developing markets.

Pakistani Internet platforms engaged in finance and business, or fintech companies, have fetched around $22 million, mostly in foreign funding, since January 2021, according to Alpha Beta Core, a tech-driven boutique investment banking and financial advisory services platform. These include recent deals by TAG Innovation, KTrade and Abhi who have raised $12.1 million in total in separate rounds.

Industry experts say Pakistan’s increasing mobile phone penetration and growing young population are major attractions for foreign funding in startups. Official data shows Pakistan has 85 percent teledensity with 183 million cellular, 98 million 3G/4G and 101 million broadband subscribers. 

The decrease in global air travel during the coronavirus pandemic has also provided an unexpected advantage for startups in Pakistan, cutting out the requirement that investors visit the country as part of the due diligence process, and making them more open to discussing deals remotely over Zoom or other video conferencing platforms.

Syed Amin Ul Haque, federal minister for IT, told Arab News fintechs were “gaining traction” in Pakistan due to government measures to create an “enabling environment,” including by increasing broadband connectivity and reducing taxes on telecoms. 

“IT enabling environment has been created in Pakistan through policy measures,” Haque said. “Withholding tax was 12.5 percent and now it has been approved by the cabinet to bring it down to 10 percent, Federal excise duty on SIM cards was 17 percent and now we have reduced it to 16 percent. All these measures will be part of the financial bill in the upcoming budget, to be implemented from first of July 2021.”

He said during the last 10 months of the current fiscal year, IT exports had increased by 46 percent, the minister said. 
 
Kalsoom Lakhani, founder and partner at Invest2Innovate (I2I) Ventures, told Arab News data collected by her firm showed Pakistani startups had already raised close to $85 million in funding. 

“Which means we have surpassed the total amount, $65.6 million raised in 2020, by the middle of the [current] year,” she said. “Most of the funding has been made in e-commerce... but a high number of deals in fintechs, mainly pre-seed and seed, were made.”

Khurram Schehzad, CEO of Alpha Beta Core, said the growth of fintech in Pakistan was because of a realization that the country’s growing retail, wholesale and trade sectors required a better financial ecosystem. 

“Pakistan is a highly under-tapped market as far as financial inclusion goes — only under 25 percent of the population is banked while cash is rampant for payments,” Schehzad told Arab News. “There is a massive retail, wholesale and trade sector which needs a financial ecosystem with ease and comfort … All these pain points, with a large middle class and tech-savvy population and youngsters, there is a need for solutions at various stages of the financial ecosystem”. 

TAG, Pakistan’s first digital financial super app, last week announced it had closed $5.5 million in a pre-seed round led by Venture Capitals Quiet Capital management and Liberty City Ventures from the United States and Fatima Gobi Ventures. The funding round is the largest ever pre-seed in the Middle East, North Africa and Pakistan region. 

“The funds will be utilized to give access to Pakistan’s large unbanked population through digital accounts,” TAG co-founder and CEO Talal Ahmed Gondal told Arab News. 

Ali Farid Khwaja, chairman of Karachi-based stock brokerage KASB Securities that owns and operates stock trading app KTrade, said the company wanted to “target 10 million mobile phone users to invest in Pakistani stocks within the next four years.”

“We will be spending money to educate how to become partners in the country’s mega corporations and connecting them with financial markets,” he said.

The KTrade app, which launched in 2019 and allows investors to trade in equities at the Pakistan Stock Exchange (PSX), has raised $4.5 million in a funding round spearheaded by Hong Kong based investment firm TTB Partners and New York based VC HOF Capital. German investor Christian Angermayer also participated in the round, according to the statement issued on Monday. 

Another Pakistani fintech, Abhi, a Karachi-based salary advance platform, this week raised $2 million in a seed round led by Vostok Emerging Finance. Village Global Village Global, a US-based venture capital firm focused on early-stage startups, also participated in the round, marking its first fintech investment in Pakistan. Other participants of the round included Sarmayacar, i2i Ventures, Zayn Capital, and Portman Wills, the co-founder of Wagestream, a London-headquartered financial wellness platform. 

To be launched in July, next month, Abhi will provide employees with salary advances based on accrued wages. 

“We have been working on this idea for the past three years and our core point was financial inclusion,” Omair Ansari, co-founder of Abhi, told Arab News. “We want to address pain points in the manual payments process and allow employees to access their salary in advance when they need it.”

The startup is currently conducting a three-month pilot run involving 20 companies from the pharmaceutical, textile, and retail sectors. 

Ansari believes the Pakistani startup market is increasingly on the radar of global venture capitalists and “looking much better now.” He plans to tap the improving conditions to expand in Pakistan and then take his venture abroad.

“After focusing first in Pakistan, we plan to expand to Bangladesh, Sri Lanka, UAE and Saudi Arabia,” Ansari said. “Overseas operations are expected to commence within the next two years.” 


Ex-PM Khan gets protective bail in two terrorism cases filed in Islamabad

Updated 13 sec ago

Ex-PM Khan gets protective bail in two terrorism cases filed in Islamabad

  • The cases were registered against him after his party supporters clashed with the police at Judicial Complex
  • Lahore High Court takes up contempt petition filed by Khan after Saturday’s police raid at his Lahore residence

ISLAMABAD: A Pakistani court on Tuesday granted protective bail to former prime minister Imran Khan in two terrorism cases which were filed against him after clashes broke out between the police and his party supporters at the Judicial Complex in Islamabad on Saturday.

Khan was scheduled to appear in a district and sessions court in a case involving the illegal sale of state gifts, commonly known as the Toshakhana reference, though the court decided to adjourn its proceedings after fighting intensified between the two sides.

Judge Zafar Iqbal allowed Khan to go back after signing the attendance roll after being informed that the former prime minister could not move to the courtroom amid teargas shelling by the police and stone pelting by the activists of the Pakistan Tehreek-e-Insaf (PTI) party.

The government decided to file cases against Khan and dozens of his party leaders and supporters on terrorism charges in the wake of the incident.

“The Lahore High Court on Tuesday approved Pakistan Tehreek-e-Insaf Chairman Imran Khan’s protective bail in two terrorism cases filed against him in Islamabad,” reported Dawn newspapers, adding the bail would be effective until March 27.

Separately, a Lahore High Court judge took up a contempt petition filed by the former prime minister after police raided his residence in Lahore on the same day when he was in Islamabad for indictment in the Toshakhana reference.

The court had instructed the police to stand down last week after they went to Khan’s residence to detain him following the issuance of non-bailable arrest warrants against him by the Islamabad district court.

“I reached the Islamabad Toll Plaza and they attacked my house,” Dawn quoted Khan as saying in the court.

“The only message they have given is that there is no rule of law,” he added.

The judge announced he was going to initiate the contempt proceedings while also asking the authorities to provide details of cases against the former prime minister.

 


Months after Pakistan floods, millions lack safe water — UN

Updated 30 min 49 sec ago

Months after Pakistan floods, millions lack safe water — UN

  • Floods in Pakistan last year damaged most water pipelines in affected areas
  • More than 5.4 million people forced to rely solely on contaminated water from ponds

ISLAMABAD: The United Nations children’s agency on Tuesday warned that after last summer’s devastating floods, 10 million people in Pakistan, including children, still live in flood-affected areas without access to safe drinking water.

The statement from UNICEF underscored the dire situation in impoverished Pakistan, a country with a population of 220 million that months later is still struggling with the consequences of the flooding, as well as a spiraling economic crisis. The floods, which experts attribute in part to climate change, killed 1,739 people, including 647 children and 353 women.

So far, less than half of UNICEF’s funding appeal for Pakistan — 45 percent of $173.5 million — has been met. According to the agency, before the floods struck last June, water from only 36 percent of Pakistan’s water system was considered safe for human consumption.

The floods damaged most of the water pipelines systems in affected areas, forcing more than 5.4 million people, including 2.5 million children, to rely solely on contaminated water from ponds and wells, UNICEF said.

“Safe drinking water is not a privilege, it is a basic human right,” said Abdullah Fadil, the UNICEF representative in Pakistan. “Yet, every day, millions of girls and boys in Pakistan are fighting a losing battle against preventable waterborne diseases and the consequential malnutrition.”

“We need the continued support of our donors to provide safe water, build toilets and deliver vital sanitation services to these children and families who need them the most,” Fadil added.

Amid the crisis, Pakistan faces uncertainty about a bailout from the International Monetary Fund. Analysts say the revival of the $6 IMF bailout, which was signed in 2019, would help Pakistan. If the global lender released a key installment of the package, it would encourage other international financial institutions to help the country, they say.

At a UN-backed conference in Geneva in January, dozens of countries and international institutions pledged more than $9 billion to help Pakistan recover and rebuild from the floods. But most of the pledges were in form of project loans, and the projects are still in the planning stages.

Prime Minister Shahbaz Sharif’s government is also facing a surge in militant attacks and political instability as his predecessor, Imran Khan, is campaigning for early elections. Sharif has rejected the demands by Khan, who was ousted in a no-confidence vote in Parliament last April.

Sharif seeks political and economic stability to ensure speedy reconstruction in the flood-hit areas, where the weakest and the children are paying the price.

“In flood-affected areas, more than 1.5 million boys and girls are already severely malnourished, and the numbers will only rise in the absence of safe water and proper sanitation,” UNICEF said.

The floods caused more than $30 billion in damages as large swaths of the country remained under water for months, forcing millions to live in tents or make-shift homes near stagnant waters that led to the spread of disease.

Sharif’s government is also trying to provide food and cash assistance to flood survivors as the Islamic fasting month of Ramadan starts this week, adding more financial burdens to the poorest of the population.


Pakistan’s parliament summoned in midst of crisis over former PM Khan 

Updated 25 min 13 sec ago

Pakistan’s parliament summoned in midst of crisis over former PM Khan 

  • Khan’s supporters have clashed with police several times over recent days during his court appearances
  • Speaker says ruling coalition called for parliament to “take important decisions” to enforce state’s writ

ISLAMABAD, March 21 : Pakistan’s parliament is to meet in a special joint session on Wednesday to “take important decisions” to enforce the state’s authority, media reported, in the midst of a crisis over anti-government defiance by former Prime Minister Imran Khan. 

Former cricket star Khan was prime minister from 2018 until 2022, when he was ousted from office in a parliamentary vote. Since then, he has been demanding a new election and holding protests across the country to press his case. 

His supporters have clashed with police several times over recent days as authorities try to force him to appear in court in connection with various cases brought against him. 

The office of the speaker of parliament, in calling Wednesday’s joint session, did not give a reason but the state-run Associated Press of Pakistan (APP) said the ruling coalition had called for parliament to “take important decisions” to ensure the writ of the state was enforced. 

The APP, reporting on a meeting attended by Prime Minister Shehbaz Sharif and his cabinet, cited the participants as saying Khan’s Pakistan Tehreek-e-Insaf (PTI) was not a political party but “rather a gang of militants,” and its “enmity against the state” could not be tolerated. 

Sharif has rejected Khan’s demand for a new election saying it would be held as scheduled later this year. 

Parliament will meet in the capital, Islamabad, as Khan’s supporters gather for his latest rally in the eastern city of Lahore. 

The clashes between Khan’s supporters and the security forces have brought a new round of political chaos to the nuclear-armed country of 220 million people, which is in the midst of a crippling economic crisis. 

Khan says the government and the powerful military are trying to stop him from contesting the next election, scheduled for November. If convicted in a case, Khan could face disqualification from the polls. 

Both the government and military deny this. 

Police have arrested hundreds of Khan’s supporters in raids in recent days in response to the clashes. 
 


Gunmen slay 11 in northwest Pakistan ‘family feud’ – police

Updated 21 March 2023

Gunmen slay 11 in northwest Pakistan ‘family feud’ – police

  • Inter-family feuds are common in Pakistan, particularly in northwestern region
  • Police official says “up to five people opened fire” on a vehicle carrying 11 people

PESHAWAR: Gunmen killed 11 people including a prominent local politician in northwest Pakistan, police said Tuesday, an ambush blamed on a decades-long vendetta between families.

Inter-family feuds are common in Pakistan, but in the mountainous northwestern region where communities abide by traditional tribal honor codes they can be particularly protracted and violent.

Police said 42-year-old Atif Munsif Khan, leader of a district council in Khyber Pakhtunkhwa province, was killed on Monday night in the town of Havelian, 33 kilometers (20 miles) north of Islamabad.

District police official Omar Tufail told AFP that “up to five people opened fire from two sides” on a vehicle carrying Khan and 10 others, including bodyguards and a police escort, “killing them all on the spot.”

“The vehicle caught fire as a result and all on board were burned alive and the charred bodies are now beyond recognition,” he said.

Tufail said the Khan family registered a police complaint “blaming the assassination on their rivals” in a feud “said to be almost five decades old,” which also claimed the life of Khan’s father and grandfather.

“Dozens of people from both sides have been killed as a result of this family feud so far,” he added.

Another local senior police official, Sajid Tanoli, confirmed the incident and ruled out the involvement of militant groups such as the Pakistan Taliban which have long thrived in Khyber Pakhtunkhwa.

Khan was a member of the Pakistan Tehreek-e-Insaf (PTI) party, led by former prime minister Imran Khan, although the men were not related.


Human Rights Watch urges Pakistan to drop ‘overboard’ terrorism charges against ex-PM’s supporters

Updated 21 March 2023

Human Rights Watch urges Pakistan to drop ‘overboard’ terrorism charges against ex-PM’s supporters

  • Police registered terrorism cases against over a dozen members of ex-PM Khan’s party over Saturday’s clashes
  • Human Rights Watch urges police to respect right to peaceful assembly, keep unlawful violence in check

ISLAMABAD: The Human Rights Watch (HRW) expressed worry on Tuesday over the use of “overboard” terrorism charges by the government against former prime minister Imran Khan’s supporters, a few days after his Pakistan Tehreek-e-Insaf (PTI) party supporters clashed with police in Pakistan’s capital.

Islamabad police on Sunday registered a terrorism case against more than a dozen members of Khan’s party for vandalism at the capital’s judicial complex. Clashes erupted on Saturday when the former prime minister arrived for a hearing in Islamabad in a case relating to the sale of state gifts while Khan was prime minister. Khan faces a slew of cases across the country, with charges against him ranging from murder to sedition, which carries the death penalty in Pakistan.

Punjab police and the caretaker provincial government have both accused Khan’s supporters of pelting stones and hurling petrol bombs at law enforcers. Khan denies the allegations and insists the Shehbaz Sharif-led ruling coalition government wants to kill him.

In its statement, the HRW urged Pakistan to “appropriately prosecute” any of the former prime minister’s supporters who have engaged in unlawful acts of violence, uphold the right to peaceful protest, and refrain from unlawful use of force.

“The use of Pakistan’s vague and overbroad anti-terrorism provisions against opposition protesters is very worrying,” Patricia Gossman, associate Asia director at Human Rights Watch, said in a statement. “If the authorities believe that Khan’s or his supporters’ actions have resulted in violence or constituted a real threat to public safety, they should be charged under the appropriate laws.”

Gossman stressed on the need for both sides to respect the rule of law and human rights and practice restraint. “It is vitally important for the police to respect the right to peaceful assembly while holding those responsible for unlawful violence to account,” she added.

Separately, Khan wrote to Pakistan’s chief justice on Monday and urged him to conduct an investigation into Saturday’s clash with law enforcers and the earlier police raid on his Lahore residence. According to a copy of the letter seen by Arab News, Khan stated that police attacked his party’s supporters when he had arrived at the Islamabad judicial complex “without any provocation.”

“I realized something was amiss and that it was not my arrest that was being planned but my assassination,” Khan wrote.

“In view of the continuing threats to my life and the assault on my home, I would request you to order a proper investigation into these events,” he added.

These actions have never happened before to anyone let alone a former Prime Minister and leader of the largest political party in Pakistan.”

On Monday night, PM Sharif chaired a meeting of the coalition government’s parties. In a press statement after meeteing, the government accused Khan’s party supporters of attacking law enforcers and vowed to take stern action against them.

“Attacks on officers and personnel of state institutions by violently trained gangs of banned organizations is very alarming,” the ruling Pakistan Muslim League-Nawaz (PML-N) said in a statement.

The police in Pakistan have used abusive measures in the escalating confrontation between police and Imran Khan’s supporters, Human Rights Watch said today.

They have charged protesters with batons and detained them under sweeping counter-terrorism laws. The authorities should appropriately prosecute any of the former prime minister’s supporters who have engaged in unlawful acts of violence, uphold the right to peaceful protest, and refrain from the unlawful use of force.

“The use of Pakistan’s vague and overbroad anti-terrorism provisions against opposition protesters is very worrying,” said Patricia Gossman, associate Asia director at Human Rights Watch. “If the authorities believe that Khan’s or his supporters’ actions have resulted in violence or constituted a real threat to public safety, they should be charged under the appropriate laws.”

All sides should display restraint and respect for human rights and the rule of law,” Gossman said. “It is vitally important for the police to respect the right to peaceful assembly while holding those responsible for unlawful violence to account.”