Centralisation and devolution, the two contending opposite trends, are turning out to be a crucial national issue with the business community, with major figures, business leaders and even members of political parties joining the divisive debate.

In a statement, a well-known business community figure, S.M. Tanveer, recently said, “The apex trade body’s district economy concept is a game-changer for Pakistan,” adding that it would encourage innovation, increase tax revenues, and contribute to balanced and sustainable growth.

The Federation of Pakistan Chambers of Commerce and Industry’s (FPCCI) initiative aims to devolve economic decision-making to the district level, empowering local communities and unlocking untapped regional potential.

Devolving powers and resources to the district level could help generate employment, stimulate entrepreneurship, improve fiscal management, and reduce economic disparities among regions, says Mr Tanveer.

As the FPCCI attempts to strengthen the third tier of governance with its District Economy concept, the Punjab Local Government Bill 2025 effectively undermines local representation even further

In sharp contrast, the Punjab Local Government Bill 2025 eliminates the district tier — a crucial link between provincial and grassroots governance — that undermines the system, say analysts at Dawn.

The PTI faces the prospect of being completely shut out of the Punjab local government elections as the party remains without an election symbol. Under the recently enacted law, officials say, any candidate elected councillor must join a political party within 30 days.

The law also allows the government to conduct the first phase of the elections on a non-party basis, which the analysts maintain effectively prevents opposition parties from participating and gaining control of the third tier of government.

The new mode also limits the citizens to casting a single vote rather than multiple votes for different seats, effectively narrowing their right in selecting representation.

With a cash-strapped federal government and the absence of autonomous representative local bodies, sustained and inclusive development currently seems almost impossible.

World Bank experts warn that the widening housing gap poses a serious challenge to social stability and economic growth.

According to the latest data as per the World Population Review, Pakistan’s housing affordability index has dropped to 0.4 from 0.5, reflecting worsening affordability amidst rising property prices, higher mortgage rates and an increasing shortage of housing units.

‘Contrary to the mandate of article 140-A of the Constitution, the new law renders elected bodies without any decision-making and policy-making abilities’

The World Bank report places Pakistan below neighbouring countries, with Bangladesh’s affordability index standing at 0.7 and India’s at 0.8. Pakistan faces a housing shortfall of around 12 million units.

The recent floods across northern regions, Khyber Pakhtunkhwa, as well as Punjab and Sindh, have displaced more than 2.5m people and destroyed thousands of homes and businesses, further deepening the crisis for low-income families struggling to secure shelter.

To add to that pressure, national food imports surged to nearly $2.25 billion during the first quarter of FY26, rising 35.56 per cent from $1.661bn posted in the same period last year.

A World Bank report emphasises the need for region-specific strategies combining income support, housing finance reforms, and sustainable urban planning to improve affordability nationwide.

That said, the Punjab government has announced an allocation of Rs100bn for the rehabilitation of victims while it claims 70pc of the survey of flood-hit areas has been completed.

Moreover, though the State Bank recently introduced a subsidised markup scheme under the ‘Mera Ghar Mera Ashiana’ programme, offering financing of up to Rs3.5m at a maximum interest rate of 8pc. Earlier, the Punjab government had launched a zero-markup initiative for low-income groups.

The FPCCI argues that Pakistan’s economy has long suffered from centralised decision-making, which has “stifled local innovation, hindered entrepreneurship, and widened regional disparities”. Its district economy model aims to empower local governments to take charge of their economic priorities and facilitate business-friendly environments at the grassroots level.

On Oct 21 the National Assembly Standing Committee on Interior and Narcotics Control considered the Islamabad Capital Territory Local Government (Amendment) Bill, 2025, that sought to include representatives of the business community in Union Councils to ensure their participation in local governance. The committee directed that a complete draft of the bill be circulated among all members for further consideration.

In a comprehensive review, Dawn’s analysts observed, “Contrary to the mandate of article 140-A of the Constitution to devolve political, financial, administrative and judicial powers to local governments, the new law renders elected bodies without any decision-making and policy-making abilities for the foreseeable future, as key powers would remain concentrated in the hands of the provincial government and be exercised through the bureaucracy, undermining the autonomy of local representatives.”

Overall the law appears less about empowering and more about enabling the provincial government to retain control at the local level even after establishing the local bodies.

The province has remained without elected local government — except for a brief period when the courts overturned their dissolution — since 2019. Analysts suggest that the Punjab government should review the law to restore the spirit of local governance.

Published in Dawn, The Business and Finance Weekly, October 27th, 2025