Conference “Devolution of Power to Local Governments: Challenges and Reforms”

General

A one-day conference titled “Devolution of Power to Local Governments: Challenges and Reforms” was organized by Islamabad Policy Research Institute (IPRI) on September 30, 2015 at Islamabad Hotel, Islamabad. The conference comprised of one working session, in addition to inaugural and concluding sessions. The speakers made presentations on various aspects of devolution of power to local governments such as “Democracy at the Grass Roots Level”, “Fiscal Empowerment of Local Governments”, and “Balancing the Responsibilities of National, Provincial and Local Governments”. The conference also discussed the challenges in establishing the local government (LG) system, the lack of coordination between the local governments and the provincial governments and the measures/reforms, required to strengthen the foundations of democracy in Pakistan.

Lieutenant General (R) Abdul Qadir Baloch, Federal Minister for State and Frontier Regions, was the chief guest while Mr. Daniyal Aziz, Member of National Assembly, Chairman Boards of Directors, Devolution Trust for Community Empowerment (DTCE) and Ex-Chairman National Reconstruction Bureau (NRB), chaired the academic session of the conference. Following three speakers were invited in the conference:

• Professor Dr. Ishtiaq Ahmad Choudhry, Head Department of Peace and Conflict Studies, National Defence University (NDU), Islamabad.
• Azhar Bashir Malik, Chief Operating Officer, Devolution Trust for Community Empowerment (DTCE).
• Muhammad Ejaz Chaudhary, Federal Secretary, Ministry of Inter-Provincial Coordination, Government of Pakistan.

Concept Note

Local Government (LG) is the basic building block for democracy. The “Local Government System” aims to empower the people at the grass roots level, allows public participation in decision-making and ensures the provision of speedy justice. The LG enables the proactive elements of society to participate in community work, development related activities and bridge the rural-urban divide. The structure of governance in Pakistan is primarily two-tiered: the Federal and Provincial. The third tier of governance “the Local Governments” have not been able to make significant impact in the political realm of the country. The political history of Pakistan reveals that the first attempt to introduce local body system was made during General Ayub Khan’s era. Ayub’s “Basic Democracy” had some semblance with a third tier of governance. Sequel to this, in 1979, General Zia-ul-Haq introduced a “Local Body System”.

In 2000, the “Local Government Plan” was introduced. The “Devolution Agenda” under the plan comprised of District Government, Tehsil Government and the Union Government. All the services that people needed were provided at the local level. Masses’ easy access to Nazims made the system conducive. Afterwards, the 18^th Constitutional Amendment (2010) was introduced. The 18^th Amendment and the devolution of power that it embodied aimed at decentralizing political power and authority to lower tiers. As enunciated in Article 140A, “every province shall establish a local government system. This LG will have elected officials through elections held by the Election Commission of Pakistan. Political, administrative and financial responsibility and authority will then be devolved by the provinces to local government officials”. Article 140A gives constitutional protection to local governments. The setting up of local governments is a constitutional requirement. Local body elections have already been conducted in Balochistan and Khyber Pakhtunkhwa (KP) while Punjab and Sindh are still to hold local body elections.

Constitutionally, the provincial assemblies are free to enact their own local governance systems. The 18^th amendment does not describe the type of local government that needs to be set up; that is left to the provinces. There is, therefore, a likelihood of four different systems of local government emerging in Pakistan.

A major challenge in three-tiered governance is the division of responsibility and authority between different tiers. To make the three-tiered governance fully functional, the “principle of subsidiary function” with a genuine decentralization of power, whereby political and financial powers are distributed among different tiers based on their capacity to deliver is required. The devolution of power should be from lower to upper tier or vice versa. According to the Devolution Plan of 2000, the power distribution was from bottom to top. Under the 2001 local government system, local bodies were autonomous even in terms of revenue collection/generation and expenditure. The local governments were equipped first for service delivery, whatever they could not deliver became the purview of the provincial government, and then provincial government’s inability to handle a task was left to the federal government. For example, local government in semi-developed urban areas is important for maintaining law and order. But, it is not possible for local government to manage a road system that runs through five districts. Such a subject is for the provincial government. Meanwhile, the province cannot defend the country’s territory, nor can it run foreign and economic affairs. Therefore, these matters fall within the purview of the federal government.

Another question that needs to be addressed, is the local government’s ability to adjust itself into the system of political representation and its interaction with the higher tiers? Central to this, is the equation between political representation at the local level and the representation through political parties at the provincial level. At the provincial and federal levels in Pakistan, it is the political parties, which determine as to how the political representation is organized. The challenge is the organization of political representation at the local level. Letting local councils at each level elect their own executive mayor or Nazim would give effective responsibility for local governance to a broadly representative group of local leaders, which would be consistent with the system of parliamentary responsibility that is already constitutionally mandated in governments at the provincial and national levels in Pakistan.

The importance of local government institutions cannot be under-estimated for a developing country like Pakistan. The local bodies are essential grass roots organizations that perform the necessary administrative functions at the municipal level, devolving power and authority to the district, sub-district and community level. Besides, for a successful democracy, there has to be a balance of power between democratic politics at the local and national levels. In other words, the local government system must engage the mainstream political parties and give them a stake in supporting local democracy.

Conference Proceedings

Ambassador Sohail Amin, President, IPRI, in his welcome address said that the subject is important as devolution of power brings democracy to the grass roots level and the local governments become financially resourceful. Its fine tuning is to be done by creating equilibrium between the responsibilities of the federation, the provinces and the local governments.

Ambassador Amin remarked that the concept of establishing local governments in Pakistan is not new. We have experienced different shades of such governments since the 1960s. Initiatives taken during different governments did contribute towards devolving power to grass roots level but did not really create a third tier of governance at that level. There also have been painful gaps at different times when the local governments ceased to exist and governance was restricted to the federal and provincial governments. As such, the structure of governance in Pakistan for most of the time has been two-tiered. The present government is once again trying to evolve a viable local government system.

It is a constitutional requirement that every province should establish a system of local government within its jurisdiction. Once the representatives of the people are elected, several responsibilities of the province get devolved to local governments. Local bodies’ elections in Balochistan and KP have already been held and the Punjab and Sindh are gearing up to hold these elections.

He said that the empirical evidence from our experience of local governments suggested that division of responsibilities between the three tiers of government somehow became controversial. Central to any efficient local government is its harmonious relationship with the provincial and the federal government. Barring few exceptions, such relationship in Pakistan gradually turns acrimonious. Genuine decentralization of power, therefore, does not take place and people at the grass roots level remain deprived of essential service delivery system.

Lieutenant General (R) Abdul Qadir Baloch, in his inaugural address, said that the local government (LG) is the third tier of the government in any country and all around the world it is functional. But unfortunately, there were interruptions in our democratic system so the democracy has not taken the roots the way it should have. Past sixty years of Pakistan’s history could not guarantee the true and viable form of local government and we are still struggling to achieve that goal.

He said that we as a nation are shy of local government. The problem started when the elected representatives in local governments started meddling in the affairs of district management group (DMG) and the police service of Pakistan (PSP). But the rules were very clear about the separation of powers between the government institutions and the elected representatives. So there comes the problem and it is ingrained in our minds. Elected representatives have nothing to do with the powers of the institutions of the state. He suggested that the elected representatives should let the government functionaries do their jobs in accordance with the rules and regulations. The elected people should only deal with the policies and provide guidance to state functionaries. The running of the government should be left to the bureaucrats and law making should be the first and foremost priority of the elected representatives, i.e. MNAs, MPAs and locally elected representatives.

He remarked that the municipal/village level activity is the main domain of the local government and we must understand this to avoid overlapping of the powers and mandate among the state institutions. He opined that the Constitution of Pakistan only says that local government system should be evolved in the country but it does not talk about the modalities as to how and what type of system has to be there. So, the task of the legislators is to make rules and regulations for the local government system.

In the end, he said that the problem with the former local government system of President Musharraf was that overnight a young person having matriculation, after becoming District Nazim, was entrusted with the powers of the Deputy Commissioner (DC) and Superintendent of Police (SP). Therefore that system did not give desired results. So, the country has to bring in that system, which suits the society and culture keeping in view the level of education.

Dr. Ishtiaq Ahmad spoke on “Democracy at the Grass Roots Level” and said that proper functioning of political system and political parties depended on the establishment of meaningful local government system as it was the first tier of democracy. He highlighted the reasons for failure of local government system in Pakistan. He recognized a continuous blame game on the part of politicians and bureaucracy who blamed each other for failure of local government system. He also talked about colonial legacy and said that in the United India, British government tried to establish viable local government system and the system functioned well. Although, he said it was an attempt to divert the attention of masses from freedom. He identified lack of political will as an important reason for not establishing local government system and quoted the example of unanimous resolution passed by assembly to postpone local bodies’ elections. He said that President Ayub Khan’s “Basic Democracy” system was the best system as it minimized the role of bureaucracy and continued to work for ten years but after that it was abolished. He also touched upon the other two local government systems and said that President Zia’s local government system was a refined form of Ayub’s system as objectionable things were reduced but after some time it was also discontinued. He highlighted that President Musharraf’s local government system was even further refined from the previous two systems and was a real plan to devolve powers at district level. He said that there was a tendency of centralization of power in every sphere and political forces found it difficult to devolve their own power.

Mr. Azhar Bashir Malik spoke on “Fiscal Empowerment of Local Government.” He defined fiscal decentralization as an inter-governmental system where the balance of power moved towards the sub-national government sector. He highlighted advantages of decentralization as moving government closer to the people, broadening the tax base and allowing alternative service delivery in social services sector. Fiscal decentralization bridges the gap between revenues raised from local taxation and non-taxation sources and non-development and development expenditure. He highlighted fiscal decentralization and Local Government Act 2013 and gave example of the Punjab and the KP. He first mentioned Punjab and said that major tax bases under Section 115 of the LGAs were to be devolved and included tax on urban immoveable property, tax on professions, trade, callings and employment, tax on advertisement and billboards, rates on water conservancy and drainage and fees on land use. He also highlighted major taxes assigned to District Councils. These included tax on transfer of immoveable property, tax on advertisement and billboards and tax on the construction of maintenance of work of public utility. He also touched upon the budget making powers of local government and said that government had the power to review budget of the local government and could ask for rectification, if found contradictory to government’s budgetary rules. He also talked about fiscal devolution in the KP and recognized the major tax bases under Section 42 of the LGA that have been entrusted to the District Government included tax on  education and health, fees for educational and health facilities, licenses, industrial exhibitions, rent for buildings, equipment, machinery and vehicles, and toll on roads, bridges and ferries. He highlighted that Tehsil Municipal Administration was vested with some major taxation bases including local tax on services, tax on immovable property including its transfer, tax on vehicles, fee on sale of animals, advertisement and billboards, licenses, development, improvement and betterment charges. He discussed the composition of Provincial Finance Commission (PFC) of Punjab and KP and argued that no representative of local government was its member. He further added that PFC was recommendatory body and provinces were not bound to follow its decisions and recommended that it needed to be reviewed and decisions should be made with mutual consultation.

Mr. Muhammad Ejaz Chaudhry presented his views on “Balancing the Responsibilities of National, Provincial and Local Governments”. He highlighted that local governments are not embedded in the constitution. The rich and mighty and the political elite dominated local governments of Ayub Khan and Zia-ul-Haq. The local governments system introduced by Gen Pervaiz Musharraf appeared very good but it could not take off. It is rather unfortunate that not a single political party in the country has stressed on the need for a local government system or made efforts to empower them. He said that local governments system is a necessity now and the decision to take the responsibility of strengthening local governments lies with the political government. He said that society is not ripe for the complete devolution because people don’t trust the politicians so the process has to evolve gradually.

He said that the 18^th amendment to the Constitution of Pakistan made a major contribution in decentralizing political powers and it dealt with all the issues except the local governments. The political leadership has to decide to implement the local government through political consensus. The 18^th amendment provides a good enabling environment for the complete devolution. He further said that the third tier of the government has been neglected in the past and the will of the political governments was quite strange regarding local governments. He emphasized that it is necessary to devolve power to people.

Mr. Daniyal Aziz, in his remarks as a Chair of the session, said that Pakistan has millions of organizations, departments and ministries, but the basic issues are still unaddressed. There are currently pointless ministries and Pakistan cannot afford such ministries. He further said that powers should be devolved from federal to provincial and provincial to local level. The administrative, financial and political powers should be transferred to the elected members as mentioned in article 140-A of the Constitution, which says that “Each Province shall, by law, establish a local government system and devolve political, administrative and financial responsibility and authority to the elected representatives of the local governments.” He also gave the example that the budget implementation before the induction of local governments was 30% and after 2001 it goes up to 90% and currently it is again going down.

Mr. Daniyal Aziz said that the main hurdle in holding local government elections is the power of bureaucracy and local governments should be people centred. Bureaucracy bars the way of effective devolution of power because the structure of the bureaucracy is unitary and graded in the form of a hierarchy; whereas the nature of the constitution is federal. When the powers are devolved to the grass roots level, the bureaucracy just cannot handle it as people with lower grades are given the fiscal and financial authorities. The bureaucracy’s desire to control everything is the problem. On the other hand, politicians have always been in support of devolution. The legislators should amend the statutes to provide citizens rights as envisaged. He said that democracy is incomplete without local governments. Mr. Aziz also explained the reasons for lack of political and administrative will to devolve powers at all levels. He concluded by saying that it is important to separate reality from perception and decentralization of power should be the ultimate solution to uphold democracy.

Recommendations

• The participants unanimously agreed that the Local Government (LG) system has an important role in strengthening the democratic society, ensuring speedy justice and creating a civic sense at grass roots level. Further, the future of democracy is tied up with the future of the LGs. Therefore, provincial governments should not delay the elections of LG. In this context, free, fair and regular elections should be ensured without any political considerations. The devolution within the party is necessary for smooth functioning of democracy.
• There was a consensus among participants that the third tier of government has been neglected. There have been painful gaps at times when local governments ceased to exist and governance was restricted to federal and provincial governments. It was recommended that concrete reforms to overcome the challenges of proper functioning in LG system are required to strengthen the foundations of democracy in Pakistan.
• The LG is the third tier of the federation and provincial government, therefore, the devolution of power to grass roots level should be given a constitutional protection that is only possible through a strong political will by the government and the political parties. There is also a need to set an educational criterion for all the category of members of LG system.
• The important factors responsible for repeated failure of local governments in Pakistan since its independence include: historical legacies of the colonial period, apprehensions of the top political leadership towards the local councils and psychological issue of hatred of the governments with the institution established by their predecessor regimes. Therefore, there is a need to change the attitudes of political parties towards LGs. The continuity of policies would help in addressing the root causes for the failure of LG system.
• The LG provincial acts passed by the four provinces to provide empowerment and political ownership to local bodies are limited in scope and excessively deferential to Provincial Governments. These laws do not provide any meaningful devolution of financial, political and administrative powers. Provinces enjoy arbitrary powers through discretionary removal of elected LG representatives; also they have arbitrary powers of inspection, to leave affairs of District Councils to bureaucracy and to exclude areas from LG jurisdiction. In this regard, the decentralization of administrative and financial responsibilities to the grass roots level is crucial for the smooth functioning of democratic system.
• The LG Acts for each province, in their current form, provide limited autonomy to the local councils in terms of fiscal management and control over service delivery, revenue, tax and police departments. If the local elections are to have any real meaning, provincial governments will have to ensure decentralization of political, administrative and fiscal power, so that, newly elected local councils have sufficient resources and authority to address service delivery and development challenges in local communities.
• The fully functional and self-independent LG could be ensued if the Provincial Local Government Commission works effectively to monitor the LG affairs without any interference by the provincial government. In the composition of provincial finance commission, there is no representative of LG as a member. Their representation in the provincial finance commission must be ensured.
• The criteria for allocation of financial resources from the federal government to the provincial government is on the principle of poverty and underdevelopment. Similar formula should be applied while allocating the financial resources from the provinces to the district governments. This pattern of allocation of financial resources will be helpful in uplifting those underdeveloped districts, which were unable to generate their own recourse due to underdevelopment and lack of opportunities in their respective areas.
• To dispel the impression that MNAs and MPAs are involved in the development projects rather than law making, which is their primary duty, there is a need that development funds given to MNAs and MPAs should be allocated through the LG.
• The corresponding weakness to the administrative part is of a fiscal nature. The local governments have no source of revenue barring what is allocated to them by the provincial government. The downward fiscal decentralization is the first step to attain the goal but the true success will depend in a large part upon the execution of projects and functions of local bodies.
• For KP Fiscal Decentralization (FD), the performance of functions related to financial transactions requires resources at local level. Provincial Finance Commission (PFC) is a recommendatory body to provincial governments and province is not bound to follow its decisions so that should be reviewed and financial decisions should be made with mutual consultation of both. There is also no participation of community in development function so their role must be encouraged. The administrative control of local governments is under local council board and provincial government, which needs to be addressed.
• For Punjab Fiscal Decentralization (FD), under the new law it is very difficult to generate revenue at the local levels so district governments would heavily depend on provincial governments for funds that should be reviewed. In composition of PFC no representative of local government is included as member, so their proper representation must be ensured. The district government would perform development functions exclusively under the Provincial government. Therefore, the local needs of the community should be given priority in the development functions.
• A major challenge in three-tiered governance is the division of responsibility and authority between different tiers. To make the three-tiered governance fully functional, the “principle of subsidiary function” with a genuine decentralization of power, whereby political and financial powers are distributed among different tiers based on their capacity to deliver is required. The devolution of power should be from upper to lower tiers of local government. The authority of the elected local government representatives should be enhanced. A balance should be created where bureaucracy and elected local representatives can work in harmony.
• Other challenges facing devolution include: lack of awareness about LG, inadequate resources to support the effective implementation of devolution, lack of accountability and lack of political will to strengthen the grass roots level of democracy and lack of a common understanding of the roles of the different institutions involved in the implementation. All these challenges can be resolved by bringing the required reforms in the system.
• There are some gaps in the proper functioning of LG system such as an undue interference in the functioning of LG institutions by political elites, bureaucracy, influential people and press, non-merit based staff induction at all tiers and poor managerial qualities of the departmental heads of LG institutions and poor coordination among them. Immediate remedial measures are required to improve the efficiency and functioning of LG system through institutional reforms.
• An institutional mechanism may be evolved in the form of political and administrative divisions at district level. This District Political Division should comprise of members of Union Council/Tehsil Council headed by District Chairman. This will certainly help to promote democratic culture and can also help to address the financial corruption.
• The development activities being undertaken by the LG should be monitored by the civil society’s representatives to ensure transparency and improvement.
• To ensure and promote democratic culture at the grass roots level and to make them directly responsible to the people; the capacity building of the local government representatives at District, Tehsil and Town/Municipal levels would be necessary. It would help them in providing better socio-economic development and effective law and order at low tiers.
• There is overlapping in duties and responsibilities in local and provincial government. There is a dire need to clearly define the responsibilities and duties of LG. The LG should be made executor of policies made by the province and the federal government. LG and provincial government relations should be improved.
• The departments which are working at federal, provincial and local level such as social welfare departments are not working at functional lines. Therefore, smooth functioning of departments and well co-ordination among three tiers of government is immediately needed to work at functional lines.
• The local government system of the political governments needs to open up participatory spaces for the citizens, and to increase their access to social and political rights. Furthermore, its fine tuning can be done by creating equilibrium between the responsibilities of federation, provinces and the local government.
• There is a need for properly implementing and improving the local government system, which is the base and backbone of true democracy at grass roots level. Development should be directed at district level according to the requirement of the general public, which is only possible through local government representatives at district level.

Disclaimer: Views expressed are of the speakers and are not necessarily reflective of IPRI policy.