As Pakistanis, it takes some effort to find hope in times like these. In the last few weeks, those associated with capital markets have found it in the spectacular rally of the KSE-100 index. Some may be excited about the two recent acquisitions: Aramco buying a 40 per cent stake in GO and Etisalat scooping up Telenor’s local operations. Others traditionally looked up to the flows in venture capital, though that is long gone and will take a while before truly bouncing back.

There are more reasons, albeit a little less mainstream or obvious. For me personally, it has been Pakistan’s position in the global mobile apps ecosystem. Over the last two years straight, it has been the fastest growing market by downloads, outpacing even the likes of India or Indonesia. According to Data.ai, an app intelligence platform, the country recorded 3.5 billion downloads in 2022 — placing it in the ninth position globally.

This also makes us by far the biggest volumetric market in the Middle East, North Africa, Afghanistan and Pakistan (MENAP) region. The next two countries on the list, Egypt and Saudi Arabia, are behind by 877 million and 1.7bn downloads, respectively. Put another way, Pakistan accounted for over 35pc of all installs in the region. However, the story was completely different in monetary terms where our consumer spending of $82.9m was even lower than Oman’s.

Obviously, that shouldn’t be news to anyone. We are a big market by number of people and small in terms of dollar value. But quite a lot of times, it can work in our favour, albeit temporarily. Take Careem, which heavily relied on Pakistan to show that hockey stick growth in users since investors were mostly concerned with volumes back then. While such examples may be few and far between now due to the pullback in venture capital, it’s only a blip in frequency.

Pakistan recorded 3.5bn app downloads in 2022, which makes it the biggest volumetric market in the Middle East, North Africa, Afghanistan and Pakistan (MENAP) region

On the supply side too, we stand comfortably ahead of our regional peers. As per Appfigures, Pakistan has around 4,700 app publishers. This is higher than even the United Arab Emirates’ 4,600 despite many studios from around the world registering there for legal purposes given it’s a business-friendly jurisdiction.

Similarly, at over 21,000, Pakistan was also well ahead of others in the count of apps by local publishers, according to Appfigures estimates. The United Arab Emirates came in second with around 18,000, followed by Saudi Arabia at 13,000 and Egypt at just 8,000.

But that’s where the optimism sort of begins to fade. Despite a healthy publisher base and a massive market of consumers, the two don’t actually overlap enough. Basically, Pakistani developers aren’t capturing a large share of the domestic demand, which is instead channelling towards more international products. In fact, if we limit our lens to only products with 5m-plus installs, just 221 of the 21,000 apps are left.

Most of the biggest apps in Pakistan are inevitably international, from Tiktok to Instagram, and virtually all tools or utility products. Even the local names you come across happen to have foreign roots or tech done largely outside. Daraz and InDrive are two notable examples, though there are many more. One explanation for this could possibly be the small levels of consumer spending, which push domestic publishers to look beyond borders in search of better monetisation opportunities.

That’d make a lot of sense, actually. Build locally at a low cost and sell to markets which pay more bucks. Except that’s not happening much either. Traditionally, games have accounted for somewhere between half and two-thirds of all spending on mobile. So if Pakistani publishers are optimising for monetisation, you’d expect them to be concentrated here.

According to a report by Mindstorm Labs and Pakistan Software House Association, the country’s gaming sector revenues are around $300m, of which $158m come from exports. These aren’t exactly small numbers. But it barely scratches the overall global opportunity. Unlike Turkiye, which has Peak Games, or Vietnam that can boast OneSoft, we barely have any studio of international brand repute.

The opportunity for export-driven monetisation isn’t limited to games, which usually require a lot more resources to develop and entail a significant risk. There’s also a sizable market for simple apps, such as note-taking or a tool that lets you add text over an image. As basic as it sounds. In fact, some local companies have successfully built a name in such niches.

For example, Pak Data is a leading player in the world of Islamic apps, Vyro.ai has quickly scaled to tens of millions of users with its background changer, and Codematics leads in the universe of universal remote controls. The world of apps can be weird like that. The only question is: can we identify that quickly enough and cash in?

Published in Dawn, The Business and Finance Weekly, December 18th, 2023