ISLAMABAD, Feb 2: The Local Government (LGs) system introduced in the country in 2001 is plagued with the phenomenon of “elite capture” amid a host of chronic administrative and financial issues, thus offering very little to the voiceless majority, says a report launched here on Saturday.

The share of LGs in the provincial allocable pool of resources has fluctuated between 37 and 39 per cent. It appears that the priority attached by provincial governments for allocations to the local governments has declined over the last five years, especially in the case of Punjab.

Prepared by the Social Policy and Development Centre (SPDC), the report, Social Development in Pakistan (Annual Review 2006-07), says international experience shows that the danger of elite capture of local institutions is a real threat where decentralisation has taken place in the presence of a power structure that is highly unequal in character, like the domination of the feudal class in the rural areas or the elites in the urban.

LGs are faced with the same dilemma keeping in view the country’s social structure. For instance, during both the 2001 and 2005 elections of district nazim in Punjab, most of the nazims were from the ruling PML-Q.

During the 2005 elections, 80 per cent of the nazims belonged to leading political families, i.e. Sardar, Chaudhry, Leghari, Chatta, Makhdoom, Kanju, while 77 per cent of them was affiliated with the PML-Q.

The former finance minister and chairman of SPDC’s Board of Directors, Sartaj Aziz, said at the launching ceremony that every army government liked the LGs system, but it had failed to improve people’s life.

He said the system had only encouraged corruption in the country as the elites siphoned off huge money meant to be spent on the development of their areas.

The report says that the overall extent of fiscal decentralisation (share of sub-national governments in total expenditure) has shown some increase over the last five years, from about 28pc in 2000-01 to over 36pc in 2005-06.

Although the provincial governments have handed over a number of major services to LGs, their share in public expenditure has remained unchanged at about 23pc. Interestingly, the share of programmes being executed by the local governments, which primarily focus on the social services, has sharply declined from 30pc in 2002-03 to 12pc last year.

The equity dimension of fiscal decentralisation is influenced mainly by the formula given by the provincial finance commissions for the horizontal distribution of current and development transfers among the district governments. But the system differs widely among the provinces. Punjab relies primarily on population, while Sindh has introduced tax collection as one of the criteria and the NWFP focuses more on backwardness.

The centre has demanded direct elections of the district nazim and appointment of a new district cadre that is not subservient to provincial governments and can work for the development of the local set-up and population.

The report also analyses how spending on the health sector has remained low in the LGs system. However, there has been an improvement in the allocation of fund for the primary education.

The report calls for granting more fiscal powers to the local governments.