The World Bank estimates that Karachi needs $9 billion to $10 billion pumped into it over the next 10 years for it to be fixed.
In a recently released 2018 report, the Bank assessed the city’s infrastructure, governance, service supply system and economic activity. It estimated that $6 billion should be spent on transport alone, $3 billion on water supply and sewerage projects and the remaining $1 billion on solid waste management.
It noted that while there was substantial poverty reduction in the 10 years up to 2015 with 9% of the city’s population living in poverty in 2014-15 compared to 23% in 2004-05, Karachi ranked in the bottom 10 cities in the Global Livability Index.
“Urban planning, management and service delivery have not kept pace with population growth and the city seems to be headed towards a spatially unsustainable, inefficient and unlivable form,” read the report.
One of the issues it highlighted was that just $110 million was spent on infrastructure development in Karachi every year. It noted that the city government spends 70 to 90% of its budget on salaries and has little left to spend on the city.
“Current infrastructure spending by the public sector is well below these requirements, despite large recent increases. The availability of public financing for Karachi’s needs is limited, which substantially increases its opportunity cost,” read the report. It also noted that the collection of urban immovable property tax from Karachi (and the rest of Sindh) was “dismal” compared to the potential. Punjab collects four times as much in this tax as every year and Indian cities do too.
The Bank also highlighted a worrying trend of high-value economic activity moving away from the city core. This stagnation of economic activity in central areas is problematic for long-term economic and social potential, it warned.
Some of the reasons it gave for Karachi’s situation were:
“In addition to large-scale public and private financing, Karachi needs difficult reforms to improve its urban governance, institutional capacity, and coordination so that it can become a more economically productive and livable city,” suggested the report.
It also highlighted four sector-specific issues and recommendations based on four key pillars that will be important for the city’s transformation:
“A poor investment climate constrains Karachi’s growth,” the Bank said, adding that businesses must deal with hindering policies and regulations. The constraints include a poor law-and-order environment, political instability, corruption, bureaucratic red tape and institutional deficiencies.
Another set of recommendations it had was to empower the local government and enhance accountability mechanisms for upward and downward accountability.