Key Takeaways
- World Economic Forum emphasizes the need for administrative reform in Pakistan.
- The goal is to promote decentralization and improve governance as the population grows.
- Reforms could involve dividing provinces into smaller units to bring decision-making closer to the people.
The World Economic Forum (WEF) has highlighted the necessity of administrative reform in Pakistan, particularly as the country’s population is projected to reach 265 million by 2030. The WEF’s Centre for Regions, Trade and Geopolitics argues that redesigning administrative geography can enhance governance and promote decentralization.
According to the WEF, creating more administrative units can lead to better governance, but the number of such units is not universally fixed. The centre suggests that dividing each existing province into four could result in 16 first-tier governments, reducing the average population per unit from about 60 million to roughly 15 million.
The WEF notes that new administrative units can only perform effectively if they are supported by capable institutions, transparent fiscal transfers, and comparable performance data. The debate in Pakistan should focus on different governance scenarios rather than a single ‘correct’ map.
More ambitious models could create 23 to 25 units based on population balance or geographical coherence, while another approach could build on existing administrative divisions, creating more than 30 units. Each scenario involves trade-offs, with fewer, larger units being easier to legislate for and finance, but requiring higher transition costs and stronger administrative capacity.
The WEF also points out that provincial revenue collection in Pakistan is limited. In 2024-25, provincial taxes generated just Rs983 billion, equivalent to less than 0.9% of GDP. Agriculture accounts for 24% of value added, but taxation of agricultural income has historically yielded little revenue relative to the sector’s size.
The IMF estimates that agriculture’s effective tax rate is just 0.3%, and agricultural income tax revenues have remained below expectations even after rates were increased in 2025. Provincial tax authorities have struggled with limited administrative capacity, weak enforcement, and inadequate information, making it difficult to identify and collect taxes on agricultural income.
Recent reforms aim to address some of these weaknesses, but their success will depend on improved data-sharing with the Federal Board of Revenue, greater automation, and stronger provincial capacity to enforce the rules. Weak local revenue systems also undermine accountability, as citizens find it harder to connect what they pay with the services they receive.
Greater fiscal proximity, if designed carefully, could strengthen this link. The WEF maintains that the debate in Pakistan should not be framed as a contest over one ‘correct’ map but as a choice among different governance scenarios. Each scenario involves trade-offs, and the success of reforms will depend on the ability to balance these factors.
