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World Bank Estimates Pakistan’s Financial Capital Karachi Needs $10 Billion to be Livable, Competitive

The World Bank estimates that Pakistan’s largest metropolitan city Karachi needs $9 to $10 billion financing over 10-year period to meet its infrastructure and service delivery requirements. The figure stands almost one-third of what the country is investing through debt financing in infrastructure ($33 to #38 billion on power plants, etc.) under the $62 billion China Pakistan Economic Corridor (CPEC).

The report titled “Transforming Karachi into a Livable and Competitive Megacity: A City Diagnostic and Transformation Strategy” and released on Tuesday identifies key areas in need of urgent attention to transform itself into a livable and competitive megacity. These are the city’s urban transport, water supply and sanitation and municipal solid waste management.

With a population of 16 million according to Census 2017, Karachi is the largest megacity in Pakistan. Despite being a large city that is home to many multi-cultural and multi-ethnic populace, it has seen a substantial decline in quality of life and economic competitiveness in recent decades. It accounts for one-third of Sindh’s population and one-fifth of the country’s urban population and is the economic and financial capital of the country.

Basic service delivery is very poor, with very low indicators for water supply, sanitation, public transport and public spaces. Pollution levels are high, and the city is vulnerable to disasters and climate change.

A highly complex political economy, highly centralized but fragmented governance, land contestation among many government entities, and weak institutional capacity have made it difficult to manage the city’s development, says the report. It highlights that Karachi has also been beset with a worsening security situation for the past few decades, although recent improvements in the security environment have led to a reduction in violent crime. However, social exclusion of marginalized parts of the population is a challenge that requires immediate attention, it points out. These factors have resulted in the rapid decline of the city’s quality of life and economic competitiveness from its thriving status after the country’s independence, the report adds.

The first part of the report provides a diagnosis of Karachi’s issues, structured around three pathways focused on key aspects of city management. Each chapter provides a rapid diagnostic of the issues and a list of possible actions that can be taken in the short and long terms.

It proposes pathways towards the transformation of Karachi into a more livable, inclusive and economically competitive city by outlining policy actions that the city can undertake.

According to the report, nclear roles, overlapping functions, and poor coordination amongst various agencies responsible for city governance and management have worsened the city’s problems. Municipal and city development functions are highly fragmented, with roughly 20 agencies across different levels of government – Federal, Provincial and local – performing these functions, leading to lack of coordinated planning and integration at the city level. These agencies also control nearly 90 percent 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 extension over preventive maintenance or rehabilitation.

Elected local governments in the city 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 spent on salaries and pensions – leaving precious little for much-needed maintenance or development of infrastructure.

The report stresses on building inclusive, coordinated and accountable service delivery institutions, and: “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.”

It also highlights the necessity of Greening Karachi for sustainability and resilience: “Invest in environmentally-sustainable infrastructure gaps and safeguard funds for its maintenance. Create mechanism 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 on Karachi’s economic, social and environmental assets, the report suggests involving private sector in infrastructure provision by creating an enabling environment via policy reforms. “Create incentives for more efficient performance of service delivery agencies. Improve the ease of doing business and encourage public-private partnerships.”

It adds: 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.

It further suggests creating a smart Karachi through policies and 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.”






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