Pakistan’s governance challenge is rooted in the distance between citizens and the institutions responsible for meeting their everyday needs. Local governments remain politically uncertain, fiscally dependent and administratively constrained, despite their potential to improve public services, strengthen the local business environment and protect household livelihoods. Meaningful devolution can create a reinforcing cycle in which better services encourage enterprise, expanding economic activity strengthens own-source revenue, and higher local revenue finances further improvements.
Pakistan’s governance crisis is visible in the street that remains flooded after rainfall, the school without a teacher, the health facility without medicine, the market without sanitation, the village road that disconnects farmers from buyers, and the municipal office where a small entrepreneur waits repeatedly for approval. These failures increase household costs, reduce productivity, weaken businesses and deepen distrust in the state.
Local-government reform should therefore not be treated as a narrow constitutional matter. It lies at the intersection of democratic governance, economic development and livelihood security. The quality of water supply, sanitation, drainage, roads, education, healthcare, markets and land administration directly affects how households earn and protect their incomes. When services fail, citizens pay an invisible tax through medical expenses, transport costs, damaged assets and lost working days.
Pakistan’s difficulty sustaining growth and delivering services has long been linked to weak economic governance and declining institutional capacity. Effective governance requires participation, transparency, efficiency, accountability and the rule of law across all tiers of the state. It also requires continuity, because institutions cannot mature when each incoming government abandons inherited systems.
The central problem is not that Pakistan has never attempted decentralisation. It has repeatedly introduced, revised and suspended local-government systems. The deeper failure is that these institutions have rarely been allowed to become permanent, autonomous and professionally capable. Their laws change with political transitions, elections are delayed, financial transfers remain uncertain and local officials often answer to provincial departments rather than elected councils. Research shows that decentralisation initiatives have often reflected ruling regimes’ political objectives rather than a sustained commitment to grassroots democracy.
If elected local representatives cannot control the staff, budgets and agencies needed to serve their communities, can such a system genuinely be called democratic devolution or is it decentralisation only in name?
The 18th Amendment expanded provincial authority, but devolution largely stopped at the provincial level. Provinces gained control over major sectors yet remained reluctant to transfer comparable powers to districts and municipalities. Research on local governance in provincial government found that overlapping mandates, bureaucratic dominance and unclear departmental roles continued to restrict local authority.
This creates a serious accountability gap. Citizens hold mayors and councillors responsible for poor sanitation, broken roads or unreliable water supplies, yet those representatives may not control the staff, budgets or procurement systems required to solve these problems. Responsibility appears local, while real authority remains provincial.
Weak local governance directly affects livelihoods. Reliable water, sanitation, drainage, healthcare and education reduce the private costs households face when public systems fail. Poor drainage damages homes, shops, crops and livestock. Weak healthcare turns preventable illness into an income shock, while inadequate schools weaken future earning capacity. Infrastructure is equally important. Farm-to-market roads, transport, storage and digital connectivity determine whether farmers, workers and small businesses can reach economic opportunities. Small local investments repairing an access road, improving a market or restoring a water scheme may generate faster returns than large projects planned from provincial capitals.
Improving local government can also transform the business environment. Traders, street vendors, farmers, transporters and small firms interact with local authorities through permits, market management, property records, waste services, parking and local fees. When these functions are fragmented, businesses face delays, uncertainty and informal payments. Strong local governments can simplify procedures, introduce one-window facilitation, digitise permits and improve roads, lighting, sanitation, drainage and public safety. These services lower operating costs, attract investment and help enterprises expand.
A stronger business environment can, in turn, expand own-source revenue. As commercial activity grows, property values improve and informal businesses enter documented systems, local governments can raise more revenue through transparent market fees, business permits, parking charges, service fees and property-related taxes.
The objective should not be to impose arbitrary charges, but to simplify levies, reduce leakage and link revenue collection to visible service improvements. This creates a virtuous cycle: better governance improves infrastructure and regulation; better services encourage enterprise and formalisation; stronger economic activity raises local revenue; and higher revenue finances further improvements. However, own-source revenue should supplement, not replace, Provincial Finance Commission transfers. Poorer districts have weaker tax bases and require formula-based equalisation.
Citizen participation must also be institutionalised. The experience of joint development in provinces like Sindh showed that community platforms can help residents obtain documentation, secure services, and present priorities directly to officials. Yet many committees met irregularly and lacked binding financial authority, demonstrating that consultation without budgets and administrative power has limited impact.
Reform should therefore focus on fixed local-government terms, timely elections, predictable fiscal transfers, clear assignment of functions, control over local staff, transparent own-source revenue systems and digital accountability. Local governments should prepare integrated economic and revenue strategies, publish budgets and contracts, and involve businesses and communities in setting service priorities. Greater autonomy must be matched by independent audits and transparent procurement.
Empowered local government is not a substitute for capable federal and provincial institutions. It is the missing link connecting national policy with household realities. Pakistan’s history has already shown what does not work: temporary councils, delayed elections, fragmented mandates and bureaucratic control without democratic accountability.
Effective reform must transfer political authority, fiscal resources and administrative control together. Together, these elements make local government more than the lowest tier of administration. It becomes an economic institution capable of reducing household costs, improving the business environment, mobilising own-source revenue, protecting livelihoods and rebuilding citizens’ trust in the state.
The writer is a research associate at the Sustainable Development Policy Institute (SDPI).
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