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.” 

Pakistani cleric calls for action over harassment of woman wearing Arabic-inscribed shirt in Lahore

Updated 26 February 2024

Pakistani cleric calls for action over harassment of woman wearing Arabic-inscribed shirt in Lahore

  • The woman was reportedly manhandled by an angry mob in Lahore’s Ichhra Bazaar on Sunday
  • Punjab Police say they have recommended officer who rescued the woman for gallantry award

ISLAMABAD: Hafiz Muhammad Tahir Mehmood Ashrafi, chairman of the Pakistan Ulema Council (PUC), on Monday condemned harassment of a woman in the eastern Pakistani city of Lahore for wearing an Arabic-inscribed shirt and demanded the authorities take action against the harassers.

The woman, who wore a dress with Arabic calligraphy printed on it, was reportedly manhandled by an angry mob in Lahore’s Ichhra market on Sunday, with the mobsters alleging the woman’s dress bore verses from the Holy Qur’an.

Videos shared online showed the woman being sheltered in a shop, before a senior woman police officer, Assistant Superintendent of Police (ASP) Shehrbano Naqvi, arrives at the scene and rescues her to safety.

Ashrafi, who heads the PUC umbrella group of religious scholars and organizations, said the woman was subjected to verbal abuse and harassment by individuals who objected to the Arabic script on her attire, but investigation revealed that the script had no sacred connotations.

“Such acts of harassment not only violate the fundamental principles of Shariah (Islamic law), but also tarnish the image of Pakistan and Islam globally,” he said in a statement, calling for “swift and decisive” action against the perpetrators.

Blasphemy is an incendiary charge in deeply conservative, Muslim-majority Pakistan, where even unproven allegations of insulting Islam and its noted personalities can provoke death at the hands of vigilantes. Politicians have been assassinated, lawyers murdered and students lynched over such accusations.

In his statement, Ashrafi stressed that Islam promoted tolerance and respect for diversity, and any form of harassment or discrimination was against its teachings.

He said the incident had reignited discussions about the need for greater awareness and education regarding cultural and religious diversity in Pakistan, expressing solidarity with the woman.

The PUC chairman urged the government to take concrete steps to protect the rights and dignity of all citizens, adding the outcome of this case would have “far-reaching implications” for the country’s reputation and its efforts to promote a more inclusive and harmonious society.

He praised ASP Naqvi for defusing the potentially volatile situation surrounding the woman’s attire.

Separately, the Punjab police said the name of the woman officer had been recommended for the prestigious Quaid-e-Azam Police Medal for her “heroic deed.”

“ASP Syeda Shehrbano Naqvi, the brave SDPO of Gulbarg Lahore, put her life in danger to rescue a woman from a violent crowd,” the police department said, quoting Provincial Inspector-General Dr. Usman Anwar.

“For this heroic deed, the Punjab Police has recommended her name for the prestigious Quaid-e-Azam Police Medal (QPM), the highest gallantry award for law enforcement in Pakistan.”



Pakistan, UAE sign agreement for promotion of date palm cultivation

Updated 26 February 2024

Pakistan, UAE sign agreement for promotion of date palm cultivation

  • The United Arab Emirates is Pakistan’s third-largest trading partner, after China and the United States
  • Under the deal, the UAE will provide technological support to Pakistan to increase date palm cultivation

ISLAMABAD: Pakistan and the United Arab Emirates (UAE) on Monday signed a memorandum of understanding (MoU) to enhance agricultural innovation and research to develop and promote various aspects of date palm cultivation and related industry, Pakistan’s top diplomat to the UAE said.

The UAE is Pakistan’s third-largest trading partner, after China and the United States. Policymakers in Pakistan consider the Gulf state an optimal export destination due to its geographical proximity, which minimizes transportation and freight costs while facilitating commercial transactions. Presently, Pakistan’s primary exports to the UAE include textile products and a variety of food items.

Pakistan’s Ambassador Faisal Niaz Tirmizi and Dr. Abdelouahhab Zaid, general-secretary of the Khalifa International Award for Date Palm and Agricultural Innovation, signed the MoU in Abu Dhabi. The signing ceremony was attended by Sheikh Nahyan bin Mubarak Al Nahyan, the UAE minister of tolerance and coexistence.

“The MoU will help in promoting joint cooperation and sharing of expertise between the two sides,” Tirmizi told Arab News. “It will also provide an opportunity to Pakistani farmers to increase cultivation of date palm including through innovative ideas.”

Being one of the pioneers, the UAE will provide technological support to Pakistan to increase date palm cultivation as Pakistan’s rich topography presents immense potential in the sector, according to the Pakistani ambassador.

Pursuant to the deal, Pakistan will organize its first international date palm festival this year.

“Pakistan and the UAE enjoy fraternal relationship and are engaged on a range of mutually beneficial collaborative projects, including in the realm of political, economic, agricultural, cultural, energy and defense cooperation,” Tirmizi added.

Pakistan has resolved three of five operational issues for KE stake sale — Al-Jomaih official

Updated 26 February 2024

Pakistan has resolved three of five operational issues for KE stake sale — Al-Jomaih official

  • Al-Jomaih bought 66.4 percent share in KE in 2005 along with Abraaj Group and Kuwait’s National Industries Group
  • In 2016, consortium decided to sell stake to Shanghai Electric but sale stuck due to regulatory and other issues

KARACHI: The top official of a consortium that owns majority shares of Karachi Electric said on Monday Saudi investors were satisfied with the outcome of a committee formed by the Pakistani government to resolve regulatory hurdles and issues of payables that have been blocking the sale of the Pakistani utility to Chinese powerhouse Shanghai Electric Power (SEP) for years.

Al-Jomaih Holding Group, one of the largest business groups in Saudi Arabia, bought a 66.4 percent share in KE in 2005 as part of a consortium comprising Al-Jomaih, Abraaj Group and Kuwait’s National Industries Group (NIG). In 2016, the consortium decided to sell the stake to China’s Shanghai Electric Power and submitted an application for a National Security Certificate (NSC) to the Pakistani Privatization Commission. However, the group still awaits approval of the deal due to long-standing issues of regulatory approvals and KE’s liquidity constraints as a consequence of mounting circular debt plaguing the country’s power sector.

In January this year, Shanghai Electric reiterated its commitment to the deal. The government of Pakistan currently owns a 24.4 percent stake in K-Electric, which powers the country’s largest city and commercial hub of Karachi.

Shan Abbas Ashary, the Chief Investment Officer (CIO) of Al-Jomaih and a director at KE, said regulatory hurdles and disputes were being addressed at a “high pace” after the Saudi investment minister wrote a letter to the finance minister of Pakistan in December last year.

“After that, we had several meetings and the SIFC [Special Investment Facilitation Council] took up the matter and created a committee of three ministers,” Ashary told Arab News, referring to a civil-military body set up last year to fast-track foreign investments.

“Thanks to the Pakistani government, and thanks to the support from the Saudi government, this interim [Pakistani] government took it [KE’s issues] very seriously,” he said, adding that out of five key issues, three operational issues had been resolved while a committee had been formed to look into the remaining issues and progress was taking place.

“The outcome is satisfactory for us and I have reported it back to Al-Jomaih Group and they understand it and they appreciate it very much that progress is being made by the Pakistan government.”

He said he hoped the issues would be resolved in “several months not several years” due to the seriousness being accorded to the matter by the SIFC, whose committee comprised the ministers of law, energy and privatization.

When asked if Shanghai Electric, which had offered to purchase shares of KE for $1.7 billion six years ago, would revaluate its offer, the Al Jomaih official said:

“Shanghai Electric has just renewed expression of interest …. They will come back, do a complete due diligence because six years have passed, it’s a long time.”

Murad Ali Shah, a Stanford graduate, secures third term as chief minister of Pakistan’s Sindh

Updated 26 February 2024

Murad Ali Shah, a Stanford graduate, secures third term as chief minister of Pakistan’s Sindh

  • Shah was first elected as chief minister in 2016 midterm and in 2018 for a period of five years
  • He bagged 112 votes, while his opponent, Ali Khurshidi, from the MQM-P secured only 36 votes

KARACHI: The provincial assembly in Pakistan’s southern Sindh province elected on Monday Murad Ali Shah, a professional engineer and banker who graduated from Stanford University, as the chief minister of the province for the third term.

Shah, whose father Abdullah Shah also served as the chief minister, was first elected for the top provincial office in 2016, when his party removed veteran politician, Qaim Ali Shah, from the post after criticism over his way of administering the province. In 2018, Shah was again elected as the chief minister after his Pakistan Peoples Party (PPP) won majority in the province. He served on the post until August last year.

In the Feb. 8 national election, the PPP once again bagged the highest 84 provincial seats and nominated Shah as the candidate for CM’s office. In Monday’s election, he secured 112 votes in the 168-member House, while his opponent, Ali Khurshidi, from the Muttahida Qaumi Movement-Pakistan (MQM-P) secured 36 votes.

After being elected as the CM, Shah said he would take along all political parties, including the MQM-P that fielded a candidate against him, and the Jamaat-e-Islami (JI) and ex-PM Khan-led Pakistan Tehreek-e-Insaf (PTI) opposition parties.

“We are never scared of criticism, no one is perfect... if you don’t criticize, then how we will learn,” he said, addressing Khan-backed independent candidates in the House. “I want to thank people on both sides [treasury and opposition] and also the people of this province.”

Shah promised to address the “immediate challenges” of militancy, rampant street crime and bandits hiding in riverine areas of the province, saying it would be a priority of his government.

The newly elected chief minister of Sindh is a seasoned politician with a diverse background in engineering and finance.

Born in the provincial capital of Karachi in August 1962, Shah acquired his early education from the St. Patricks High School and a Bachelor’s degree in Civil Engineering from the NED University of Engineering and Technology. He pursued dual Masters of Science degrees in Civil-Structural Engineering and Engineering Economic Systems from Stanford University in California.

Shah has an extensive experience of working in both public and private sectors in Pakistan, UK, Kuwait, and the US from 1986 to 2002. He worked as an engineer at multiple positions before becoming an investment banker at prestigious institutions like Citibank and the Gulf Investment Corporation.

In 2002, Shah ventured into politics and has since excelled in navigating the tricky arena, winning five provincial assembly elections and holding key provincial portfolios like revenue, irrigation, finance, energy and planning and development.

His election to the CM’s office came two days after the provincial assembly in Sindh held its inaugural session, amid protests by opposition parties over alleged rigging of the election. On Sunday, Shah’s party had Owais Qadir Shah and Anthony Naveed elected as speaker and deputy speaker of the House.

Pakistan’s commerce minister attends WTO ministerial conference in Abu Dhabi 

Updated 26 February 2024

Pakistan’s commerce minister attends WTO ministerial conference in Abu Dhabi 

  • Commerce Minister Dr. Gohar Ejaz meets counterparts from Saudi Arabia, UAE, Bahrain and China, says state-run media 

ISLAMABAD: Pakistan’s Caretaker Commerce Minister Dr. Gohar Ejaz is in Abu Dhabi to attend the the13th high-level ministerial meeting of the World Trade Organization, state-run media said on Monday, as representatives of various countries around the world gear up to discuss global trade in the shadow of Israel’s war on Gaza and conflicts in other parts of the globe. 

The WTO’s ministerial conference, scheduled to run until Thursday, includes discussions on various contemporary issues ranging from trade and environment to climate change, sustainability, and inclusion in its agenda. 

“Caretaker Minister for Commerce, Industry and Investment Gohar Ejaz is in Abu Dhabi to attend the 13th World Trade Organization (WTO) Ministerial Conference,” the state-run Radio Pakistan said. 

It added that Ejaz met his counterparts from other countries, including Saudi Arabia, UAE, Bahrain, Egypt, Turkiye, and China in Abu Dhabi. 

The UAE is Pakistan’s third-largest trade partner after China and the United States. It is also viewed as an ideal export destination by policymakers in the South Asian country due to its geographical proximity with Pakistan that reduces transportation and freight costs.

The Gulf country is also home to an estimated 1.8 million Pakistani expatriates and after Saudi Arabia, the second-largest source of remittances for the South Asian nation of more than 240 million. Pakistan’s principal exports to the UAE consist of textile products and various food items.

Last month, Pakistan and the UAE inked multiple agreements worth over $3 billion for cooperation in railways, economic zones, and infrastructure at the World Economic Forum in Davos.