Furquan Kidwai is CEO and founder at Dawaai. Prior to this journey, Kidwai was an investment banker for over eight years in London where he was Head of CEEMEA Financing as well as Senior Vice President in the Fixed Income business at the Royal Bank of Scotland. Before joining RBS, Kidwai worked at Merrill Lynch and Lehman Brothers in their London and New York offices. Kidwai has a master’s in international Relations from Cambridge University. He also holds an MSc in Financial Engineering & Risk Management from Imperial College London and BEng (Hons) in Electrical and Computer Engineering from the University of Bristol.

Below are selected contents from BR Research’s recent interview with Furquan, focusing on Covid-related issues at the intersection of healthcare, technology, and economy.

BR Research: When the pandemic arrived in Pakistan in late February/early March, many observers had predicted a growth spurt in digital economy, mainly for online sales and delivery of groceries, medicines and other essentials. Five months on, how well have those predictions held up?

Furquan Kidwai: The pandemic has led to an explosion of e-commerce around the world. Staying home was widely mandated or advised to mitigate the spread of the pandemic, or “flatten the curve”, creating an ideal space for digital businesses. In many instances, we saw the market adapt, where players like FoodPanda and Careem extended services to include wider product lines. In other cases, existing players like Dawaai became more popular, not only amongst its regular customers but also among larger groups looking for the right products and services from the comfort of their homes.

Without doubt, though, the circumstances have leapfrogged the digital space in Pakistan by a good 9 to 12 months, especially in terms of user acceptability of e-commerce. Dawaai itself saw a growth of about 3 to 4x within the span of a few weeks. The looming question now is whether Pakistan can sustain this growth and create value for the economy.

BRR: Please explain a bit how this growth spurt can be sustained.

FK: There is a chance that as Covid-19 subsides, the medical professionals, hospitals and clinics offering online services will revert to traditional modes of healthcare provision. Many brick-and-mortar businesses developed an online presence and erupted onto the digital space but if motivated only by short-term profitability, then any such growth in the digital space is superficial and would lose momentum as the economy “normalizes”.

Private sector players need, instead, to take a longer-term view on investing in their businesses and focusing on “care model innovation” to keep acquiring and serving customers, in and beyond Covid-19. Companies also need to take their economic models into consideration. Enabled by technology, the economic incentives for eHealth service provision should be at par with, if not higher than, conventional methods. In other words, technology should be an optimizer improving the efficacy of your business, not a blocker.

Massifying this impact on a nationwide scale requires that the government be the enabler driving digital access to healthcare, promoting the uptake of tech-based solutions to developmental problems.

BRR: What have been the main opportunities and challenges for the growth of digital economy in Pakistan during this crisis?

FK: Well, the fact is that the digital economy is an extension, or an added layer, of the traditional economy. The digital economy does not operate in isolation but, in fact, is one way of creating solutions to very real problems affecting millions daily.

When approaching it with this understanding, you will realize that the digital economy has challenges like those of the economy overall. Pakistan’s economy struggles with issues around regulation, taxation, inter-provincial movement of goods and so on. Concisely, whenever the traditional economy struggles, it hampers the growth of the digital economy as well.

Having said that, since Pakistan’s economy is still very nascent there are many areas of improvement. If addressed effectively through digital solutions (healthtech, edtech, fintech), these are opportunities. If left unaddressed (regulation surrounding tech-enabled companies), these interrelated issues quickly become barriers to economic progress.

BRR: In what ways have the stakeholders been able to respond to the digital opportunities and challenges thus far?

FK: The public sector had several responses, including establishing a relief fund and emergency helplines for medical assistance. They also actively created and disseminated informational content for awareness on Covid-19, while quelling misinformation that was circulating. I would say the government as well as NGOs utilized technology to a much larger extent than seen in recent years, to better address the pandemic.

The pandemic brought to light weaknesses in existing systems and the private sector was quick to jump into this space. Disrupting traditional value chains, many companies in multiple sectors transformed their products, processes, and business models. While solving problems in the market, companies have improved the efficacy of their own functions by switching to remote work, flexible hours etc., driving down their costs and passing these efficiencies on to the end consumer.

BRR: What sort of inadequacies have been revealed on the supply-side and the demand-side of the digital ecosystem?

FK: Pakistan has had more of a dependency on trade (rather than investment) for its GDP and the pandemic exposed issues particularly around supply-side robustness. There is a need for redundancies and/or substitutes on the supply-side. There is also an overall lack of transparency which makes smoothening of processes through digital integration difficult.

The biggest obstacle on the demand side was the fact that misinformation and rumormongering, rather than science or utility, is driving demand for many products and services in the healthcare space.

BRR: How has Dawaai.Pk responded to the challenges and opportunities thrown up in these times?

FK: On the supply-side, our team at Dawaai focused on ensuring inventory, minimizing disruptions in our supply. To cater to the increasing demand, we have expanded our operations, and our team, to better cater to market needs and fulfill the rising number of orders.

We have also launched many new, needed services like 2-hour delivery through Dawaai FAST, provided access to free mental healthcare for our users, developed a guide on homecare for COVID-19 patients, to name a few.

BRR: Worldwide, it has been observed that the pandemic responses of the governments that have been rather successful in containing the virus spread have involved troubleshooting with technological tools to get the most out of coronavirus-specific healthcare interventions and economic relief. How would you characterize Pakistan’s public-sector response against Sars-Cov-II at the intersection of healthcare, economy and technology?

FK: In my opinion, the public sector response was inadequate and fell short of the opportunities the pandemic presented. For instance, look at the cash payments made by the government to lockdown affectees. These circumstances were ideal for spurring a nationwide digital payment system, through which the relief payments could have been made seamlessly to a large population, without risking infection. It would have also been a big step towards financial inclusion in Pakistan.

Given the scale of the COVID-19 crisis, the government should have taken a more forward-looking approach and create comprehensive systemic solutions that are sustainable rather than quick-fix solutions that address only the issue at hand. Instead of taking a reactionary approach, the government could have actively tackled misinformation, promoted the use of technology, and created an enabling environment for e-commerce.

BRR: How would you describe the response of the private sector in the healthcare industry vis-à-vis adoption of digital tools during this crisis?

FK: The private sector is adapting and moving towards it, but this is a reactive rather than proactive response. As of now, we have fragmented efforts from various healthcare merchants instead of a comprehensive digital health management experience for patients. That is what we strive to achieve at Dawaai.

BRR: What sort of investment opportunities have been revealed as a result of achieving a degree of digital sophistication in the healthcare-related operations in the private and/or public sector amid this crisis?

FK: There have been a lot of missed opportunities in digital healthcare. While the global digital space is booming, how well Pakistani companies adopt these technologies for greater higher efficacy, remains to be seen. Alongside an up and coming tech start-up industry, most traditional industries are not digitalized and may choose to remain so in the absence of a significant stimulus driving them to act otherwise.

Globally, the investment environment will be tougher, especially for the private sector, primarily because there is enough value available in public markets. Nonetheless, these opportunities will be sought because of how healthcare has come to the forefront with a lot of low-hanging fruit. A higher portion of private capital will be allocated towards healthcare, with Deloitte estimating global healthcare spending to grow by 5 percent CAGR from 2019-2023.

While there is a need for healthcare infrastructure, Covid-19 has exposed the limitations that come with it. It is reasonable, then, to expect investment towards more sophisticated solutions to traditional problems like rising healthcare costs, changing patient demographics, and most importantly, addressing evolving customer expectations. We are likely to see innovations in care delivery, advanced technology for health, and data interoperability – these are some critical areas of interest.

BRR: What are some of the key regulatory and legal measures that the government can take to make any investment prospects more appealing?

FK: The government needs to take a more strategic approach, enabling digital transformation to significantly increase Foreign Direct Investment in Pakistan. A more strategic view means having clarity on Pakistan’s role in digitalizing South Asia in the next 5, 10, 15 years. With that approach, Pakistan would be better able to develop a legal and regulatory environment governing the entire e-commerce sector.

The central issue in Pakistan is archaic legal structures and inadequate, or absent, regulations concerning e-commerce. There is a need to develop a regulatory environment that enables the quick and easy deployment of foreign capital. To make investing in Pakistan more attractive, foreign capital and local founders need to have aligned economic interests in a mutually agreeable jurisdiction, under a comprehensive legal framework. There is a playbook at play in neighboring countries and others across Southeast Asia making their regulatory and legal environments more conducive by encouraging capital investments and ease of doing digital business.

Essentially, an online marketplace is just a channel for goods and services, digital or otherwise, to be pushed from. There needs to be a clear recognition of the fact that since the digital economy is an extension of the traditional economy, disharmony in the legal framework governing the two will only hinder the growth of the former. In fact, in terms of enforcing regulations, e-platforms are more transparent where lack of compliance are easily detected. Therefore, regulations governing e-commerce platforms should be at least at par, if not more favorable than their traditional counterparts.

Overall, Pakistan needs to be more responsive to the wave of digitalization, adapting its regulatory environment quicker, or risk being left behind.