ISLAMABAD: Pakistan should redesign its administrative geography to promote decentralization and improve governance as its population continues to grow, the World Economic Forum said, warning that institutions must evolve when the scale of governance no longer matches the scale of society.
The WEF's Centre for Regions, Trade and Geopolitics said in an analysis that creating more administrative units can lead to better governance, but stressed there is no universal answer or ideal number of provinces, states or counties.
The center said that when populations grow faster than institutions, governments must be willing to redesign them so that decisions, resources and accountability are brought closer to the people affected by them.
Pakistan's population could reach 265 million by 2030.
A modest reform could divide each existing province into four, creating 16 first-tier governments and reducing the average population per unit from about 60 million to roughly 15 million, according to the center.
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 to create more than 30 units, with average populations closer to those of other large federations.
The center said each scenario involves trade-offs. Fewer, larger units may be easier to legislate for and finance, while a greater number could bring provincial capitals, budgets and political authority closer to citizens, though it would entail higher transition costs and require stronger administrative capacity.
The debate in Pakistan should not be framed as a contest over one "correct" map, but as a choice among different governance scenarios, the center said.
It cautioned against treating boundary reform as a cure-all, noting that new administrative units can improve responsiveness only when accompanied by capable institutions, transparent fiscal transfers, comparable performance data and incentives for local revenue mobilization.
Provincial Revenue Collection
The center said Pakistan's provinces now shoulder major service-delivery responsibilities, yet their own-source revenue remains 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 International Monetary Fund estimates agriculture's effective tax rate at just 0.3%, while agricultural income tax revenues have remained below expectations even after rates were increased in 2025.
For decades, 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 seek 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 because citizens find it harder to connect what they pay with the services they receive. Greater fiscal proximity, if designed carefully, could strengthen that link.
"For a country exposed to floods, water stress, rapid urbanization and youth employment pressures, proximity is not a luxury; it is part of resilience," the center said.
It cautioned, however, against pursuing administrative redesign merely to create more units. In some countries, too many weak local bodies lacking adequate fiscal or institutional capacity can leave governments fragmented but ineffective.
The goal is not simply to multiply administrative units, but to align scale, authority, resources and accountability, the center said. Pakistan thus raises a question that many fast-growing economies will increasingly face: when does administrative scale itself become a constraint on development?
Gaps and Disparities
The center noted that successive governments in Pakistan have taken major steps toward decentralization in recent decades to keep pace with demographic change, including the 18th Constitutional Amendment and the seventh National Finance Commission award. However, despite their promise, many decisions remain distant from the communities most affected by them.
Lahore district has a population of around 13 million, while Harnai district in Balochistan has just 128,000. A policy designed in a provincial capital must therefore cater to vastly different local realities.
Disparities are also evident in education. The Planning Commission's District Education Performance Index found that none of the 134 districts assessed reached the "very high" performance category.
Recent household survey data also show that 28% of children aged five to 16 are out of school nationally, with provincial rates ranging from 21% in Punjab to 45% in Balochistan.
These gaps reflect the distance between policymakers and districts, budgets and outcomes, and authority and accountability, the WEF center said.
