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Business Recorder
2 days ago
- Business
- Business Recorder
Digital rupee set to transform Pakistan's financial landscape
Pakistan is undergoing a profound digital transformation towards digital finance in the financial system with the pilot initiation of a Central Bank Digital Currency (CBDC) by State Bank of Pakistan (SBP). RAAST is a real-time payment system in the country and the officials of SBP have stated that since its inception in 2021, it has handled more than Rs 8 trillion worth of transactions. The CBDC is not just a channel to transfer money like RAAST – it represents the money itself, issued by the central bank. Pakistan has a mobile phone penetration rate of over 82 percent and the expected remittance inflow of an estimated 38.3 million during the fiscal year 2024-25. It stands ready to use CBDC to enhance financial inclusion by cutting transaction fees, digitalisation of welfare payments, and including millions of unbanked citizens into the formal economy. The economic consequences of embracing CBDC are the trade-offs between high short-term expenditure and efficiency, inclusion, and transparency in the long run. According to the SBP annual report of 2022-23, Pakistan spends over Rs 28 billion annually in cash-management-related activities annually in Pakistan, including storage and maintenance of cash, printing, banknotes processing, distribution, and ATM-related maintenance, despite cash accounting being approximately 62 per cent of transaction volume at the mid of 2023. These expenses may be significantly lower as the use of programmable digital rupees that can be stored on a secure mobile wallet can substantially replace physical money in the system that the central bank can issue as digital form of legal tender. The cost of using traditional payment channels of paying via ATM withdrawals, or clearing a cheque is still expensive and time consuming. As of 2022, the fees for using ATM vary between Rs 20- 23 service fee per transaction, and a cheque clearing process may require two days of business, with challenges to control over liquidity and maintaining cash flow. In addition, the latest Global Findex report published by the World Bank in 2021 revealed that the number of Pakistani adults who are not using any financial service is more than 100 million, clarifying the drawbacks of the traditional financial system of Pakistan. According to State Banks data of 2024, RAAST has facilitated transactions of over 160 million, across bank accounts and electronic wallets, which has made instant and free financial transfers. It has been doing this since its introduction in the year 2021. With that being said, experts share that RAAST is unlikely to make money even though it serves as a payment rail. Contrary to these, CBDC represents sovereign digital currency, fully supported and actually issued by the SBP, and is not dependent on the balance sheets of commercial banks. The trend follows the general pattern abroad, with such nations as China and the Bahamas developing their virtual currencies to supplement or minimize the use of the conventional banking system. According to a report published by the International Monetary Fund (IMF) in March 2022, China Digital Yuan pilot was commended, stating that CBDCs can enhance financial inclusion with access to safe, convenient digital payment instruments, many of which Citizens, who lack bank accounts, or maintain them at under-staffed or under-equipped institutions, receive limited benefit. Relatively, the Sand Dollar project has been introduced in the Bahamas back in 2020 and has helped in scaling up financial services to previously inaccessible areas in the islands. The legal foundation of CBDC in Pakistan was put in place by the Digital Currency Regulatory Framework (DCRF) act of 2024 that authorized the issuance of digital legal tender by the SBP, cyber security and data privacy requirements, and digital banking licensing. According to the 2023 report published by Bank for International Settlements, unless there is a robust regulatory framework in place, CBDCs can subject users to privacy violation and financial fraud, and therefore it is quite important that Pakistan is already making steps towards setting a regulatory framework. To complement this scenario, the government of Pakistan enacted the Act of Virtual Assets, 2025, which was a historic bill that formed the Pakistan Virtual Asset Regulatory Authority (PVARA). The mission of PVARA is to control and oversee the ecosystem of virtual assets that entail, but are not limited to crypto currencies, tokenized assets, and other digital financial products. The mission of such body of authority is to furnish an orderly legal framework that facilitates innovation without jeopardizing investors and alleviating the risk of money laundering, financing of terrorists, and fraud. The Virtual Assets Act has given the PVARA power to license the providers of services involving virtual assets, strict observance of anti-money laundering (AML), and the knowledge-your-customer (KYC) requirements, and established transparency and accountability in the digital asset market. With the formation of PVARA, Pakistan joins an increasingly long list of nations implementing serious sets of rules to handle digital assets such as Singapore Monetary Authority of Singapore and the UK Financial Conduct Authority. This is a step that is also compliant with international requirements as spelt out by the Financial Action Task Force (FATF) who requires countries to ensure that they oversee the safety of the virtual assets and the service providers. Among pilot projects it is considering are direct payment of social safety net programs like BISP and Ehsaas via CBDC wallets, programmable utility payments, and cross-border remittance corridors that could help to push the estimated $8 billion of annual informal remittance outflow in Pakistan, the World Bank reported in 2023. There are success stories like eNaira that is being launched in Nigeria, where the Central Bank of Nigeria (2023) notes that eNaira has ended up solving the government-to-person payments, and lowered leakages. The rollout of CBDC also supports Pakistan's project URAAN, specifically its E-Pakistan pillar focused on digital governance and inclusion. By offering digital cash accessible via mobile phones, CBDC could help bridge gaps in financial access, reduce the size of the informal economy, and enhance tax transparency, as detailed in the Planning Commission of Pakistan's 2024 documentation. Globally, United Nations Development Programme (UNDP) experts view CBDCs as tools to advance Sustainable Development Goals by promoting financial inclusion and reducing poverty. In its 2022 report, the UNDP emphasized that 'digital currencies can accelerate economic development by integrating marginalized populations into the formal financial system.' To ordinary Pakistanis, living in remote locations or low-income families, CBDC wallets may be their entry point into the formal finance realm. A daily-wage earner or a small-business owner or shopkeeper who may only have a simple mobile phone could access welfare, pay utilities, start savings-all without having to open a traditional bank account. In conclusion, while Pakistan faces significant costs in developing CBDC infrastructure, including cyber security safeguards and institutional reforms, the potential benefits are transformative. These include drastically reduced cash handling costs, faster and cheaper payments, greater inclusion of unbanked populations, and improved government accountability. The CBDC is not intended to replace existing payment systems immediately but to complement platforms like RAAST. Together, these tools can form a resilient digital financial architecture essential for Pakistan's economic modernization. (The writer is an Assistant Professor of Finance at the Pakistan Institute of Development Economics (PIDE). He can be reached at [email protected].) Copyright Business Recorder, 2025
Khaleej Times
3 days ago
- Business
- Khaleej Times
UAE among three countries where every adult resident owns a phone
The UAE, along with Norway and Libya, is among the only three countries in the world where every adult resident owns a mobile phone, according to a new study. In the Gulf region, Saudi Arabia, Bahrain, and Oman follow closely with 98 per cent mobile phone ownership among adults, while Kuwait stands at 95 per cent, according to the World Bank's Global Findex 2025 report. Several developed countries also report high mobile phone penetration. In Sweden, Iceland, Finland, Lithuania, Italy, Denmark, and Estonia, 99 per cent of adults own a mobile phone. The figure stands at 98 per cent in the United States, Cyprus, Algeria, Hong Kong (China), Latvia, Mongolia, and Vietnam. In most other developed nations, mobile ownership typically ranges in the mid-90 per cent range. Among major developing countries, the numbers are notably lower: 66 per cent in India, 63 per cent in Pakistan, 78 per cent in the Philippines, 85 per cent in Egypt, and 92 per cent in the United Kingdom. 'Mobile phones and the internet have become widespread and essential to daily life in economies around the globe. As of 2024, 86% of adults worldwide own a mobile phone,' the World Bank noted. 'For many people, barely an hour passes without using a mobile device — whether to make a call, send a text, read the news, conduct business, post on social media, make payments, play games, or search for information. As digital connectivity expands, online interaction is becoming a top priority for individuals, businesses, and governments alike.' Internet usage is also high across the Gulf Cooperation Council (GCC), ranging between 86 per cent and 99 per cent over the past three months. This trend is reflected in the 2025 Global Digital Shopping Index, which found that the UAE leads the world in mobile-driven online shopping, with 37 per cent of purchases made via mobile devices. This surpasses Singapore (34.8 per cent), the UK (27.6 per cent), and Brazil (24.4 per cent). Commissioned by Visa Acceptance Solutions and conducted by Pymnts Intelligence, the study also found that 67 per cent of UAE consumers used a mobile device in their most recent retail purchase — a 23 per cent increase since 2022. Additionally, 38 per cent of UAE shoppers completed their latest retail transaction online using a mobile phone or computer for home delivery. 'The UAE's approach shows what is possible when all stakeholders work together to build the future of commerce,' said Salima Gutieva, vice-president and country manager for Visa UAE. A separate study by Syrve Mena highlighted the continued dominance of food delivery apps in the region. Around 75 per cent of mobile orders from surveyed restaurants were processed through platforms like HungerStation, Talabat, and Deliveroo. The remaining 25% were handled through call centers, proprietary apps, or restaurant websites — further underscoring the central role of mobile technology in the daily lives of UAE residents.
Zawya
3 days ago
- Business
- Zawya
Mobile-phone technology powers saving surge in developing economies
WASHINGTON: More adults than ever in low- and middle-income countries now have bank or other financial accounts, leading to a rise in formal saving, according to the World Bank Group's Global Findex 2025 report. This momentum in financial inclusion is creating new economic opportunities. Mobile-phone technology played a key role in the surge, with 10 percent of adults in developing economies using a mobile-money account to save—a 5-percentage point increase from 2021. In 2024, 40 percent of adults in developing economies saved in a financial account in 2024—a 16-percentage-point increase since 2021 and the fastest rise in more than a decade. Higher personal saving—through banks or other formal institutions—fuels national financial systems, making more funds available for investment, innovation, and economic growth. In Sub-Saharan Africa, formal savings increased by 12-percentage points to 35 percent of adults. World Bank Group President Ajay Banga said, 'Financial inclusion has the potential to improve lives and transform entire economies. Digital finance can convert this potential into reality, but several ingredients need to be in place. At the World Bank Group, we're working on all of them. We're helping countries get their people access to new or improved digital IDs. We're constructing social protection programs with digital cash-transfer systems that deliver resources directly to those in need. We're modernizing payment systems and helping to remove regulatory roadblocks—so that people and businesses have the financing they need to innovate and create jobs.' Bill Gates, Chair of the Gates Foundation, one of the supporters of the Global Findex, added, 'More people than ever have the financial tools to invest in their futures and build economic resilience, including women and others previously left behind. This is real progress. The case for investing in inclusive financial systems, digital public infrastructure, and connectivity is clear—it's a proven path to unlocking opportunity for everyone.' The Global Findex is the definitive source of data on global access to financial services—from payments to saving and borrowing. It highlights a major milestone in financial inclusion: nearly 80 percent of adults worldwide now have a financial account, up from 50 percent in 2011. But 1.3 billion adults still lack access to financial services. Mobile phones could help close this gap: about 900 million adults without financial accounts have a mobile phone, including 530 million with smartphones. Meanwhile, in the Middle East and North Africa, account ownership rose to 53 percent from 45 percent in 2021. In 2024, 17 percent of adults save formally, up from 11 percent in 2021.
Bloomberg
3 days ago
- Business
- Bloomberg
Mobile Money Lifts Africa Savings to Decade High: World Bank
Sub-Saharan Africans boosted their savings at the fastest pace in more than a decade, driven by the growing impact of mobile money accounts across the continent. The share of adults in sub-Saharan Africa who saved through formal channels surged by 12 percentage points to 35% in 2024, the second-highest regional rate after East Asia and the Pacific, according to the World Bank's Global Findex Database 2025.
Al-Ahram Weekly
5 days ago
- Business
- Al-Ahram Weekly
Mobile tech fueled financial inclusion boom in developing economies in 2024: WB's Global Findex 2025 - Tech
Developing countries are experiencing an unprecedented rise in financial inclusion, with more adults than ever now owning a bank or mobile-money account, according to the World Bank Group's newly released Global Findex 2025 report. The momentum is reshaping personal finance in low- and middle-income economies, driving formal savings and unlocking new opportunities for inclusive economic growth. The Global Findex 2025 provides a comprehensive look at how financial services—especially mobile and digital—are shaping the future of inclusive development. In 2024, 40 percent of adults in developing economies reported saving in a financial account—a 16 percent increase from 2021 and the fastest progress recorded in more than a decade. In Sub-Saharan Africa, the share of adults saving formally jumped by 12 percentage points to 35 percent, reflecting a significant shift toward more structured financial behaviours. Mobile phone technology has played a key role in this leap. Ten percent of adults in developing countries now use mobile money accounts to save—double the 2021 figure. According to the report, this surge in digital financial inclusion is transforming how people manage money and enabling governments to expand access to credit, improve welfare delivery, and support long-term investment. 'Financial inclusion has the potential to improve lives and transform entire economies. Digital finance can convert this potential into reality, but several ingredients need to be in place. At the World Bank Group, we're helping countries strengthen digital IDs, build cash-transfer programs, modernize payment systems, and remove regulatory roadblocks,' said World Bank Group President Ajay Banga. The report also noted that global account ownership had reached nearly 80 percent—up from just 50 percent in 2011. Yet, 1.3 billion adults remain unbanked. Of those, almost 900 million own a mobile phone, including 530 million with smartphones—highlighting the untapped potential for further inclusion. 'More people than ever have the financial tools to invest in their futures and build economic resilience, including women and others previously left behind. This is real progress,' said Bill Gates, Chair of the Gates Foundation, which supports the Global Findex. The gender gap is also narrowing. In low- and middle-income economies, women's account ownership nearly doubled—from 37 percent in 2011 to 73 percent in 2024—driven by mobile financial services and digital wage and welfare transfers. However, the report warned that rising digital engagement brings new risks. While 86 percent of adults globally own a mobile phone (68 percent of whom use smartphones), only half of adults in developing economies use a password to protect their devices, leaving them vulnerable to financial fraud and data theft. Digital payments are proliferating. In 2024, 42 percent of adults in developing countries made an in-store or online merchant payment via mobile phone or card, up from 35 percent in 2021. More governments and employers are now channelling payments directly into accounts, a shift that reduces leakages and improves transparency. The report also includes regional highlights. In East Asia and the Pacific, 86 percent of adults own smartphones, and 83 percent have account access—the highest digital connectivity worldwide. In South Asia, account ownership is largely driven by India, where 90 percent of adults are financially included. Sub-Saharan Africa leads globally in mobile money usage, with account ownership rising from 49 percent in 2021 to 58 percent in 2024. In the Middle East and North Africa, account ownership grew from 45 percent to 53 percent, while formal saving rose from 11 to 17 percent. In Latin America and the Caribbean, over half of account holders use them digitally. Europe and Central Asia lead developing regions in internet use and mobile penetration. In Egypt, 74.8 percent of eligible citizens aged 15 and above had active financial accounts by the end of 2024, according to the Central Bank of Egypt (CBE). That figure translates to around 52 million Egyptians—out of an eligible population of 69.6 million—managing their finances through formal channels, including banks, Egypt Post, mobile wallets, and prepaid cards. The CBE attributed this progress to ongoing coordination with strategic partners across the financial ecosystem—including commercial banks, government ministries, and regulatory bodies. Their collective efforts have focused on advancing economic inclusion, particularly for women, youth with disabilities, and entrepreneurs. Follow us on: Facebook Instagram Whatsapp Short link:
