September 24, 2023

Firms and gig workers are seeing losses accumulating due to internet outages in major cities.

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Karachi, Pakistan On a hot day in Karachi, Pakistan Railways employee Mohammad Junaid stops his motorcycle at the curb to ask passersby if they need a ride. Junaid works part-time for a taxi company and earns around PKR 800 ($2.7) a day.

“My salary is not enough to cover expenses,” he told Al Jazeera. “I have to work for Bykea [the ride-hailing startup] provide for your family.”

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However, the suspension of internet services has reduced his income as trips are booked through an app that needs internet.

It’s the same with thousands of app-based food delivery service customers.

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Serious internet connection problems have been reported in the country’s major cities over the past three days since the arrest of Imran Khan, chairman of the Pakistani political party Tehreek-e-Insaf. Following the arrest, protests erupted across the country, including in front of the Pakistan Army General Staff. Many cities have witnessed violence.

The Telecommunications Authority of Pakistan said on Tuesday that mobile broadband services had been suspended at the direction of the Ministry of Home Affairs, but did not give a timeline for their restoration. On Thursday, Khan’s release was ordered after the country’s Supreme Court found his arrest illegal. However, the mobile broadband shutdown has not been lifted.

The decision comes at a time when Pakistan’s economy is struggling on many fronts.

Headline inflation hit a record high of 36.4 percent in April. Workers’ remittances, which contribute more than 8 percent to the economy, fell 29.2 percent year-on-year in April. Exports decreased by 26.68% in April compared to the same period last year. The World Bank has revised up Pakistan’s expected growth rate from 2 percent to just 0.4 percent.

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Political unrest in the country pushed the Pakistani rupee to a new low of 298.93 against the US dollar in the interbank market on Thursday.

“Pakistan is constantly struggling with dual deficits — a current account deficit and a budget deficit,” said Ehsan Malik, CEO of the Pakistan Business Council, an industry-wide advocacy group. “Now they have a third deficit, a deficit of trust. Recent developments are a continuation and buildup of this deficit.”

“IMF [International Monetary Fund] does not trust either the current or the previous government,” Malik said, explaining the lack of trust. “Our traditionally friendly countries are embarrassed to come out with [as Islamabad has not met all IMF bailout conditions]. Politicians do not trust each other. The judiciary is divided and the government is at odds with [the judiciary’s] solutions”.

He said that while demand has fallen sharply due to inflation, supply has been affected by a shortage of foreign exchange reserves.

“People, mostly skilled people like IT and engineers, are leaving Pakistan to look for opportunities abroad,” he said.

Samiullah Tariq, head of research and development at the Pakistan Kuwait Investment Company, said the latest unrest could delay the resumption of an IMF program that has been tied to Islamabad receiving funding from partners.

“The recent unrest could delay the receipt of necessary funding from bilateral and multilateral partners,” he said.

What’s more, tax collection is likely to fall due to lower output, while unemployment will rise and workers in the gig economy who depend on mobile internet will be disproportionately affected, he added.

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“Political Circus”

Political unrest has led the government to shut down the internet in several cities, hurting businesses and gig workers. [File: Sabir Mazhar/Anadolu]

Ville Erola, chairman of the Finnish-Pakistan Business Council, said the current “circus” in Pakistan is damaging its international image and discouraging foreign direct investment (FDI).

“The political circus going on in Pakistan is absolute bullshit from an international point of view, and things like that only harm – or even destroy – Pakistan’s image as a destination for international business and foreign direct investment,” he said.

“Do we really want to create an image of a country with mass demonstrations, unstable politics and demonstrations everywhere? Like in the so-called banana republic? And even they would be better off. And yet, do we want foreign investors to be interested in Pakistan? It can’t be.”

Aamir Ibrahim, CEO of Jazz Mobile Network, said mobile broadband is the lifeline of the digital ecosystem and a critical productivity driver across all sectors.

“The disruptions not only limit people’s ability to connect with friends and family, but also deprive 125 million Pakistanis of access to basic services such as education, health care and trade that are critical to their well-being,” Ibrahim said.

“It also prevents them from participating in the global economy as this suspension continues to seriously affect freelancers.”

Telecom operators suffered an estimated loss of revenue of Rs 1.64 billion ($5.4 million), while the government lost about Rs 574 million ($1.9 million) in tax revenue due to service outages, said Al Jazeera source in the industry. Fearing government repercussions, the source requested anonymity.

Ibrahim Amin, chairman of the Pakistan Freelancers Association, said the IT freelance industry is losing nearly $2 million a day due to the suspension of internet services.

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He added that it also creates a very bad image for Pakistan’s IT sector, which will affect the country’s IT business in the future.

Meanwhile, Israel’s international platform Fiverr for connecting freelancers to people in need of services such as content writing and programming is automatically putting Pakistani IDs into unreachable mode due to the situation.

Fiverr reports on its website that freelancers from Pakistan are in a region that is currently experiencing internet outages. He adds that these freelancers may not be able to complete orders as quickly as possible.

Jehan Ara, a member of the World Bank’s Gender Advisory Board, said people in her international network, seeing the horrific footage of violence, write to her to ask how she’s holding up.

“Investors refrain from investing because they are more concerned about not only the dollar to the rupee, inflation or the policy of the State Bank. They are concerned about the internet and mobile outages and their impact on business continuity and growth,” said Ara, who is also the founder and CEO of Katalyst Labs, a Karachi-based technology accelerator.

“Our e-commerce business, which has been growing due to the steady increase in digital adoption, has been hit in one fell swoop – taxi services, online marketplaces, food delivery businesses, etc. have all been hit, including drivers and couriers who depend on from daily wages.

“The arrest of Imran Khan has angered many young people who see him as the only hope for this country,” she added.