Effective devolution key to Sindh's betterment

Local bodies of entire country need fiscal, administrative powers to improve governance

KARACHI:

Effective devolution of political, administrative and financial powers to the lowest appropriate tier of the government is essential for improving governance and achieving sustainable economic growth, speakers at a discussion said on Thursday.

Speaking at a session titled "Devolution: The Way Forward for Improving Governance in Sindh" organised by the IBA's Centre for Excellence in Journalism, panelists debated whether Pakistan's governance problems could be addressed through the creation of new provinces or by strengthening existing provincial and local governments.

Former federal finance minister Miftah Ismail said the creation of new provinces could not by itself guarantee better governance, arguing "the focus should instead be on empowering citizens and governments at the appropriate level." He said no country could develop and prosper without improving public living standards and education, while stressing that political and administrative reforms had to translate into better services for ordinary citizens.

Ismail argued that the devolution of responsibilities without corresponding financial powers would remain incomplete. He questioned the logic of National Finance Commission (NFC) arrangements if provinces themselves did not establish effective Provincial Finance Commissions (PFCs) to transfer resources to local governments. "Provinces will not do devolution as nobody leaves power," he said and added that new provinces would also provide no guarantee of better governance if elections were not fair and institutions were not functioning effectively.

Former federal secretary M Younus Dagha said administrative units needed greater authority and pointed to the historical link between stronger local governments and improvements in social indicators. He said "unfortunately" devolution had repeatedly advanced under military governments, while elected provincial governments had generally been reluctant to surrender authority to lower tiers.

Dagha highlighted the contrast between Karachi and other parts of Sindh, saying that areas on the right bank of the Indus continue to face flooding and administrative problems while provincial authorities remain heavily occupied with Karachi. If local governments were empowered, he argued, they would be able to respond directly to the problems of their own areas rather than waiting for decisions from provincial authorities.

He also raised the issue of Karachi's fiscal resources, claiming that changes involving the distribution of Octroi and Zila Tax (OZT) had deprived the city of substantial revenues. Research on Sindh's local-government finances has similarly identified OZT as historically one of the most important own-source revenues for municipal councils, particularly Karachi.

Dagha said all three tiers of the government - federal, provincial and local - should operate within clearly defined jurisdictions while maintaining institutional coordination. He further argued that provinces should be allowed greater control over the energy system to support local industries, but said the principle should extend across the distribution system so that electricity and other services could respond to local economic needs.

Economist Kaiser Bengali said Pakistan's decentralisation debate remained constrained by a "fear factor" among political actors and provinces. He said the 18th Constitutional Amendment and the 7th NFC Award were attempts to correct the imbalance of powers between the federation and provinces. The 7th NFC Award increased the provincial share in the divisible tax pool from 47.5% to 57.5% from 2011-12 and introduced criteria beyond population for distribution among provinces.

Bengali argued that the fiscal system should provide stronger incentives for provinces to improve living standards, education and revenue generation rather than relying predominantly on population-based transfers. He also stressed the principle of subsidiarity, under which each function should be performed by the relevant level of government capable of delivering it effectively.

IBA faculty member Dr Nausheen Wasi said the debate over creating new provinces was emerging from quarters that, in her view, were indifferent to the broader public interest. She argued that the fundamental question was whether the state wanted to serve citizens or concentrate power among a few actors. Wasi also linked the debate over administrative restructuring with wider international environment and discussions around mineral resources and corporate farming.