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Sindh Has The Potential To Grow Its Economy. But Does The Government Have The Will To Do It?

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When the 18th amendment was passed, it was for the first time that the executive authority between the federation and provinces was redefined with provinces given more legislative and policy space. Before this, Pakistan had a heavily centralised governance structure in which the federal government had the sole responsibility to give strategic direction for national development goals.

However, the new constitutional framework reinforced a multilevel governance system by extending greater autonomy to the provinces. Since then, provinces have been trying to improve the policy framework, laws, rules, regulations, system, procedures and processes as per emerging requirements.

Public investment is a critical area that underpins the development agenda of a province. Thus, with enhanced autonomy and expectation to deliver, there is a growing realisation that provinces have to invest in systems and capacity-building to fulfill the goals envisioned in the 18th Amendment.

Although so many years have passed, efforts by the provinces to absorb additional mandate have been found wanting. On the other hand, it is a challenge politically and administratively to take up new roles with regard to policy-making and implementation. The 18th amendment has effected a revision of Federal Legislative List Part I and Part II and abolished the Concurrent Legislative List. As a result, 53 subjects have been assigned to the federal government, 18 subjects to the Council of Common Interests (CCI) and all residual subjects to provincial governments.

In the post-18th amendment paradigm, provinces have enacted new laws to regulate devolved functions. As a first step, Sindh enacted the Sindh Revenue Board Act, 2010, to regulate matters relating to the fiscal and related economic policies and later the province promulgated the Sindh Sales Tax on Service Act, 2011, for the levy and collection of Sindh Sales Tax on the services.

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Given its inherent economic advantages, Sindh has great potential to grow its economy over the next 10 to 15 years, driven in part by increased global trade and trade with the rest of Pakistan. With the right policies, its young and growing workforce (Sindh’s demographic dividend), its strategic location, abundant natural resources and vibrant business community, there is potential to transform the province into a powerhouse of Pakistan’s economic growth. Sindh’s inherent advantages also include the presence of Karachi, a gateway to foreign markets and a potential source of agglomeration economies. By 2030, industries such as information technology services and export- oriented light manufacturing could drive growth in Karachi and in rapidly growing secondary cities. Rural communities could benefit from improved agricultural productivity, stronger health and education outcomes, and closer connections to markets in urban Sindh and beyond.

The province can learn from the experience of other economies that have successfully overcome similar deep economic challenges to attain high growth rates for a sustained period of time. While each country had its own specific problems and solutions, there are some striking commonalities to their experience. Four of these commonalities are particularly relevant to a province such as Sindh, as it seeks to develop a growth strategy: high rates of saving and investment; openness to international markets; a reliance on market forces to allocate resources; and good governance (with commitment and capability to implement reforms).

  • Improve the investment climate for productivity growth, pursue a phased transition to e-government for all interactions with citizens and firms to improve transparency, accountability and efficiency, while also enacting legal reforms to rationalise business regulation.
  • Improve urban land markets through improved regional planning, modernising land records, regularising informal settlements, releasing vacant land for development, establishing effective industrial parks and revising land use regulations.
  • Improve rural service delivery through public-private partnerships, particularly focusing on improving outcomes for women and girls.
  • Improve connectivity to markets.
  • Invest in transport and telecommunication links that better connect rural Sindh to the economy, and Sindh’s economy to the rest of the world, while also shifting transport investments toward maintenance and a more efficient modal mix.
  • Improve efficiency of the logistics and transport industry.
  • Strengthen government credibility and accountability.
  • Establish public-private dialogue mechanisms to improve the design and implementation of reforms, including as oversight of strategy implementation.
  • Strengthen budgeting and budget-tracking processes, including increased funding of local governments.
  • Establish online citizen feedback mechanisms for service delivery.
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The Sindh government has developed a draft Sindh Vision which should be followed by a well-articulated Growth Strategy. The World Bank supported Government of Sindh in developing a coherent draft Sindh Growth Strategy which has been unduly delayed for approval due to inefficiency and nitpicking attitude of some bureaucrats. Once the growth strategy is formulated and finalised it will establish broad fiscal parameters, development objectives and priority programmes.

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