$10 billion needed to fix Karachi’s problems: World Bank
The World Bank estimates that Karachi needs $9 billion to $10 billion pumped into it over the next 10 years for it to be fixed.
In a recently released 2018 report, the Bank assessed the city’s infrastructure, governance, service supply system and economic activity. It estimated that $6 billion should be spent on transport alone, $3 billion on water supply and sewerage projects and the remaining $1 billion on solid waste management.
It noted that while there was substantial poverty reduction in the 10 years up to 2015 with 9% of the city’s population living in poverty in 2014-15 compared to 23% in 2004-05, Karachi ranked in the bottom 10 cities in the Global Livability Index.
“Urban planning, management and service delivery have not kept pace with population growth and the city seems to be headed towards a spatially unsustainable, inefficient and unlivable form,” read the report.
One of the issues it highlighted was that just $110 million was spent on infrastructure development in Karachi every year. It noted that the city government spends 70 to 90% of its budget on salaries and has little left to spend on the city.
“Current infrastructure spending by the public sector is well below these requirements, despite large recent increases. The availability of public financing for Karachi’s needs is limited, which substantially increases its opportunity cost,” read the report. It also noted that the collection of urban immovable property tax from Karachi (and the rest of Sindh) was “dismal” compared to the potential. Punjab collects four times as much in this tax as every year and Indian cities do too.
The Bank also highlighted a worrying trend of high-value economic activity moving away from the city core. This stagnation of economic activity in central areas is problematic for long-term economic and social potential, it warned.
Some of the reasons it gave for Karachi’s situation were:
- Unclear roles, overlapping functions, and poor coordination among various agencies responsible for city governance and management
- Municipal and city development functions are highly fragmented, with roughly 20 agencies across federal, provincial, and local levels performing these functions, leading to a lack of coordinated planning and integration at the city level.
- These agencies also control nearly 90% of land in Karachi, but are reluctant to make it available for development.
- Public investment in infrastructure is reactive and uncoordinated, with a persistent focus on expansion of infrastructure over preventive maintenance or rehabilitation of existing assets.
- Elected local governments have weak systems and capacity and are not empowered to deliver many municipal functions. The provincial government retains substantial control over various city services and functions, such as master planning, building control, water and sewerage, solid waste management, and development of peri-urban and peripheral lands.
- Local governments are in an extremely weak financial position, relying almost solely on transfers from the provincial government to meet their budgetary needs, of which a majority is consumed by salaries and pensions, leaving precious little for much-needed maintenance or development of infrastructure.
“In addition to large-scale public and private financing, Karachi needs difficult reforms to improve its urban governance, institutional capacity, and coordination so that it can become a more economically productive and livable city,” suggested the report.
It also highlighted four sector-specific issues and recommendations based on four key pillars that will be important for the city’s transformation:
- Building inclusive, coordinated, and accountable service-delivery institutions. Create strong coordination mechanisms among various public land-owning and service-delivery agencies. Improve the ability of these agencies to plan, finance, and manage development programs. Empower local governments to take the lead in city management.
- Greening Karachi for sustainability and resilience. Invest in environmentally sustainable infrastructure gaps and safeguard funds for its maintenance. Create mechanisms to protect vulnerable groups from the negative impacts of economic growth and climate change. Build a resilient and sustainable environment with an emphasis on livability and regeneration.
- Leveraging Karachi’s economic, social, and environmental assets. Involve the private sector in infrastructure provision by creating an enabling environment via policy reforms. Create incentives for more efficient performance by service delivery agencies. Improve the ease of doing business and encourage public private partnerships. Reduce delays and discretionary power for key business transactions under city and provincial authorities. Improve cost recovery and revenue collection for basic services while safeguarding vulnerable groups such as the poor. Leverage the city’s land assets (such as state-owned land in prime locations) to finance critical infrastructure.
- Creating a smart Karachi through policies and the use of smart tools and technologies. Innovate with smart policies to better manage city services, improve economic competitiveness, and facilitate engagement with citizens. Interventions should also focus on improving the ease of doing business to help enable economic growth and job creation.
“A poor investment climate constrains Karachi’s growth,” the Bank said, adding that businesses must deal with hindering policies and regulations. The constraints include a poor law-and-order environment, political instability, corruption, bureaucratic red tape and institutional deficiencies.
Another set of recommendations it had was to empower the local government and enhance accountability mechanisms for upward and downward accountability.
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