The World Economic Forum’s (WEF) Centre for Regions, Trade and Geopolitics has highlighted the potential benefits of reorganising Pakistan’s administrative structure, arguing that governance systems must evolve as populations grow and societal needs change.
The centre maintains that creating additional administrative units can improve governance, but stresses that there is no universally ideal number of provinces, states or counties. Instead, institutional boundaries should reflect changing demographic realities and bring decision-making, resources and accountability closer to citizens.
According to the centre, one possible reform would be to divide each of Pakistan’s existing provinces into four units, creating 16 first-tier governments. This would reduce the average population per unit from approximately 60 million to around 15 million.
The centre argues that Pakistan’s debate should focus on evaluating different governance models rather than determining a single ideal administrative map.
More extensive proposals could establish 23 to 25 administrative units based on population distribution or geographical considerations. Another option would be to build on existing administrative divisions, creating more than 30 units with average populations closer to those found in other large federations.
Each model, however, would involve trade-offs. A smaller number of larger units could be easier to legislate for and finance, while a greater number of units could bring provincial capitals, budgets and political authority closer to local communities.
The latter approach could also entail higher transition costs and require stronger administrative capacity, the centre noted.
International experience also suggests that changing administrative boundaries alone cannot guarantee better governance. Such reforms must be accompanied by capable institutions, transparent fiscal transfers, comparable performance data and incentives to increase local revenue collection.
The centre observed that Pakistan’s provinces have substantial responsibilities for delivering public services, but their ability to generate revenue independently remains limited.
During the fiscal year 2024-25, provincial taxes generated Rs983 billion, equivalent to less than 0.9 per cent of gross domestic product (GDP).
Agriculture contributes around 24 per cent of Pakistan’s value added, yet taxation of agricultural income has historically generated limited revenue relative to the sector’s economic contribution.
The International Monetary Fund (IMF) estimates the effective tax rate on agriculture at just 0.3 per cent. Agricultural income tax collections have also remained below expectations despite increases in tax rates in 2025.
Provincial tax authorities have faced longstanding challenges, including limited administrative capacity, weak enforcement and inadequate information, making it difficult to identify taxable agricultural income and ensure compliance.
Recent reforms aim to address some of these shortcomings. However, their effectiveness will depend on better data-sharing with the Federal Board of Revenue (FBR), greater automation and stronger provincial enforcement capabilities.
The centre also warned that weak local revenue systems can undermine accountability by making it difficult for citizens to connect the taxes they pay with the public services they receive.
“For a country exposed to floods, water stress, rapid urbanisation and youth employment pressures, proximity is not a luxury; it is part of resilience,” the centre said.
It cautioned, however, that administrative restructuring should not simply aim to increase the number of units. Excessive fragmentation can create numerous local bodies without the fiscal resources or institutional capacity needed to govern effectively.
The central objective, it said, should be to align administrative scale with authority, resources and accountability.
The centre noted that Pakistan has taken significant steps towards decentralisation in recent decades, including the 18th Constitutional Amendment and the seventh National Finance Commission (NFC) Award.
Despite these measures, many policy decisions remain distant from the communities most affected by them.
The difference in population sizes across districts illustrates the challenge. Lahore district has approximately 13 million residents, while Harnai district in Balochistan has a population of around 128,000.
Consequently, policies designed at provincial headquarters must address vastly different demographic, geographical and administrative conditions.
Regional disparities are also evident in education. According to the Planning Commission’s District Education Performance Index, none of the 134 districts assessed achieved the “very high” performance category.
Recent household survey data indicate that 28 per cent of children aged between five and 16 are out of school nationwide. Provincial figures range from 21 per cent in Punjab to 45 per cent in Balochistan.
The centre said these disparities reflected broader gaps between policymakers and districts, budget allocations and actual outcomes, as well as administrative authority and accountability.
It argued that Pakistan’s growing population and uneven development raised an important question for policymakers: whether the existing scale of administration was becoming an obstacle to effective governance and sustainable development.
