ISLAMABAD: Pakistan should consider redesigning its administrative boundaries to improve governance and decentralise decision-making as its population grows, the World Economic Forum (WEF) has said.
In an analysis, the WEF’s Centre for Regions, Trade and Geopolitics argued that governments must adapt their institutions when the scale of administration no longer matches the needs of society.
The centre stressed that no single model or ideal number of provinces, states or counties works for every country. Instead, Pakistan should assess different options based on population, geography, administrative capacity and public finances.
Pakistan’s population could reach 265 million by 2030, according to the analysis.
WEF Outlines Options for More Administrative Units
One proposal would divide each of Pakistan’s four provinces into four units, creating 16 first-tier governments. Under this model, the average population per unit would fall from around 60 million to approximately 15 million.
More ambitious proposals could establish 23 to 25 units based on population balance or geographical considerations. Another option would use existing administrative divisions to create more than 30 units, bringing average populations closer to those found in other large federations.
The WEF centre said each approach would involve trade-offs.
A smaller number of larger units could make legislation, budgeting and financing easier. A greater number of units could bring provincial capitals, budgets and political authority closer to citizens, but would increase transition costs and demand stronger administrative capacity.
The analysis said Pakistan should not treat the debate as a search for one perfect administrative map. Instead, policymakers should compare different models and assess their likely impact on governance and public services.
The centre also cautioned that creating more provinces would not automatically improve government performance. Reforms would need capable institutions, transparent fiscal transfers, comparable performance data and incentives for local revenue collection.
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Provincial Revenue Collection Remains Weak
The analysis highlighted limited provincial revenue collection as a major challenge.
Pakistan’s provinces are responsible for delivering important public services, but their own-source revenues remain relatively small. Provincial taxes generated Rs983 billion in fiscal year 2024-25, equivalent to less than 0.9 per cent of gross domestic product, according to the report.
Agriculture contributes around 24 per cent of Pakistan’s value added, yet taxes on agricultural income have historically generated limited revenue relative to the sector’s size.
The International Monetary Fund has estimated agriculture’s effective tax rate at just 0.3 per cent. Agricultural income tax receipts have also remained below expectations despite higher rates introduced in 2025.
Provincial tax authorities have struggled with limited administrative capacity, weak enforcement and inadequate information. These problems make it harder to identify taxable agricultural income and collect the revenue due.
Recent reforms aim to address some of these weaknesses. Their success will depend on better data-sharing with the Federal Board of Revenue, greater automation and stronger provincial enforcement.
The WEF centre said weak local revenue systems can also weaken accountability because citizens struggle to connect the taxes they pay with the services they receive.
“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 centre said.
However, the analysis warned that creating too many underfunded administrative bodies could fragment government without improving services. The objective should be to align administrative scale with authority, resources and accountability.
Decentralisation Has Yet to Close Regional Gaps
Pakistan has taken major steps towards decentralisation in recent decades, including the 18th Constitutional Amendment and the seventh National Finance Commission award.
Despite these changes, the WEF centre said many decisions remain distant from the communities they affect.
Differences in district populations illustrate the challenge. Lahore district has around 13 million residents, while Harnai district in Balochistan has approximately 128,000, according to the analysis.
Such differences create varied demands for public services, infrastructure and administrative resources.
Education outcomes also reveal substantial regional disparities. The Planning Commission’s District Education Performance Index found that none of the 134 districts assessed reached the “very high” performance category.
Household survey data cited in the analysis show that 28 per cent of Pakistani children aged five to 16 are out of school. The reported provincial rate ranges from 21 per cent in Punjab to 45 per cent in Balochistan.
The WEF centre said these gaps highlight the distance between policymakers and districts, budgets and outcomes, and decision-making authority and accountability.
It argued that administrative reform should focus not simply on creating more units, but on making governments more responsive, financially capable and accountable to the people they serve.
