World Bank Document

Home , Debal, Karachi Port Trust, Transport in Karachi

Report No.4503.PAK Pakistan SindUrban Sector Memorandum Public Disclosure Authorized

May 7,1984 Urbanand WaterSupply Division SouthAsia ProjectsDepartment FOR OFFICIAL USE ONLY Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized

Document of the World Bank

This document hasa restricteddistribution and may be usedby recipients only in the performanceof their official duties. Its contentsmay not otherwise be disclosedwithout World Bankauthorization. G(URRECTCYEQUIVALENTS

Currency Unit = Rupee (Rs) Rs 10 = US$0.77 US$1 = Rs 13.0

MEASURES AND EQUIVALENTS

1 meter (m) = 39.37 inches or 3.28 feet 1 kilometer (km) = 0.62 miles 1 hectare (ha) = 2.47 acres or 10,000 square meter 1 liter (1) = 1.06 quarts liquid or 0.26 gallons 1 marla = 20.9 square meters or 225 square feet 1 kanal = 418 square meters or 20 marlas

PRINCIPAL ABBREVIATIONS AND ACRONYMS

ADP Annual Development Programme GOP Government of Pakistan GO SIND Government of Sind HBFC House Building Finance Corporation HDA Hyderabad Development Authority HMC Hyderabad Municipal Corporation KDA Karachi Development Authority KMC = Karachi Metropolitan Corporation KPT Karachi Port Trust KTC Karachi Transport Corporation KWMB Karachi Water Management Board KWSB Karachi Water and Sewerage Board MLO Martial Law Order NTWFP = Northwest Frontier Province RPO = Sind Regional Plan Organization WASA = Water and Sanitation Agency FOR OFFICIALUSE ONLY PAKISTAN

SIND URBAN SECTOR MEMORANDUM

Table of Contents

Page No.

PREFACE AND EXECUTIVE SUMIMARY ...... i -ix

I. BACKGROUND ...... *...... 1

A. The Province of Sind ...... e , ...... 1. - Urban Development ...... *...... 1

- Karachi ...... 2 - Hyderabad and Sukkur ...... 3 - The Smaller Towns ...... 3

B. Institutional and Financial Framework ...... 3 - Federal Institutions ...... 4 - Provincial Institutions ...... 4 -Divisional Level ...... 0..... 5 - Local Institutions in Karachi ...... 5 - Local Institutions in Secorndary Towns ...... 5 - Government Finances ...... 5

C. Urban Land and Shelter ...... 6 - Recent Legal Developments in the Housing Sector. . 7 - Organizations Active in Land Development .... 8 - Town Planning ...... 9 - Housing Supply and Demand ...... 9 - Plot Development in Karachi ...... 10 - Katchi Abadis in Karachi ...... 12

D. Urban Services...... 13 - Water Supply ...... 13 - Sewerage and Drainage ...... 15 - Solid Waste Management ...... 15 - Traffic and Transportation ...... 16

II. ISSUES AND OPPORTUNITIES ...... g..., 17

A. Regional Development ...... 17 - Distribution of City Sizes...... 17 - Economic and Social Contrast . . 18 - Alternative Dispersal Strategies .... 20 - Opportunities for Action...... ,...... 22

B. Institutional Framework ...... 22 - Urban Management in Karachi ,...... 22

- Urban Management in Secondary Towns ...... 24 - Comprehensive Programming and Budgeting ...... , 25 - Staffing and Training ...... 25 - Opportunities for Action ...... 26

This documenthas a restricteddistribution and may be used by recipientsonly in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Page No.

C. Pricing and Urban Finance ...... 26 - Pricing of Public Services ...... I...... * 27 - Urban Finance ...... 0...... 28 - Opportunities for Action ...... 30

D. Urban Land and Shelter ...... 30 - Growth of Katchi Abadis in Sind ...... 30 - Use of Plots in Karachi ...... 33 - Pricing of Land ...... 33 - Plot Allocation ...... 34 - Standards of Low Income Plots ...... 35 - Opportunities for Action ...... o...... 35

E. Urban Services ...... 36 - Water Supply ...... 36 - Sewerage and Drainage ...... 37 - Traffic and Transportation in Karachi ... 38

III. URBAN DEVELOPMENT STRATEGY - PROGRAMS AND PROSPECTS ...... 40

A. Strategy and Objectives for Future Programs ...... 40 B. Immediate Action Plan ...... 0...... 42

List of Annexes

1. Historical Abstract of Sind... .. 44 2. Urban Population Growth in Sind and the Nation . .... 47 3. Urban Development in Sind ...... 53 4. Inter-District Population Growth ...... 58 5. Review of Karachi's Economic Concentration ...... 65 6. Employment in Sind ...... 0. ... 71 7. IncomeDistribution .X...... 84 8. Existing Governmental Institutions . .. .90 9. Finances and Resource Flows. 95 10. Urban Organization and Management Proposals for Karachi 99 11. The Sind Building Control Ordinance ...... 105 12. KDA Advertisements for Plots ...... 115 13. Katchi Abadi Upgrading in Karachi ...... 117 14. The Spatial Distribution of Services ...... 123 15. Source Documents ...... 126

MAPS

16535 - Pakistan, Cities with More Than 100,000 Population 16536 - Pakistan, Districts and Major Towns in Sind SIND URBANSECTOR MEMORANDUM

Preface

This report is based on the findings of an urban sector mission 1/ which visited Pakistan in February 1982 and travelledextensively in and arounrdKarachi and in Sind (visitingnine provincialtowns). During these visits the mission met with many Government officials,elected repre- sentatives,businessmen and private individuals,with whom the main urban sector issues were discussed. The mission worked closely with the Regional Plan Organization(RPO), the staff of which acted as counterpartsand provided invaluableinformation and guidance to the mission members.

The objective of this memorandumis to highlight the main issues and opportunitiesin the urban sector in Karachi and the rest of Sind and outline a program which would contributeto developmentin the sector. More detailed descriptionsand analysis of conditionsin the urban sector are available in the publicationsof the RPO and other agencies (see Annex 16 for list of publications). The memorandum is aimed at three distinct target groups and is structured accordingly:

(a,) an Executive Summary for senior decision-makers;

(b) a brief but comprehensivereport to inform administratorsand others in Pakistan and the World Bank of main issues (those who are familiar with Sind may wish to skip the background section); and

1/ Consistingof Messrs. D. Graham, J. Courtney,C. Nenckhoff (Bank staff), C. Turner and Professor H. Richardson (consultants).

- ii -

SIND URBANSECTOR MEMORANDUM

Executive Summary

1. Sind (population 19.0 million), the second largest province of Pakis- tan after the Punjab (population47.l million), is also the most urbanized with 43% of the population living in urban areas. This urban concentration is due to Karachi (population5.1 miLlion), 1/ Pakistan's largest city and only port. The rest of Sind is predominantlyrural with only 21% of the population living in urban areas. The urban population is growing at the rate of 4.4% per annum and about 60% of population growth over the next 20 years will be located in urban areas. The key urban sector issues in Sind center on:

(a) the regional developmentbalance; (b) institutions,training and public awareness; (c) the pricing of public services, and urban finance; (d) land and infrastructuredevelopment; (e) water supply and sewerage; (f) urban transport.

These issues are described in more detail below.

Regional DevelopmentIssues (paras 2.01-2.18)

2. The contrasts between Karachi and the rest of Sind are marked and give rise to the issue of "duality,"which has important policy implications. On the one hand we see a rapidly expanding, relatively prosperous city serving many national functions, while, on the other hand, there is a large, poor, backward, rural area of the rest of Sind, with very little linkage between the two economies. Provincial Government perceives this as a major issue and would like to channel some of Karachi's prosperity to the rest of Sind; it also wants to relieve some of the pressure exerted on Karachi's services by high populationgrowth. There are many constraintsto achieving this:

(a) Commercial opportunitiesin Karachi provide higher rates of return on capital than elsewhere;

(b) Land and infrastructureservices are underpricedin Karachi, attracting labor and capital and placing a burden of subsidies on the Provincial Government;

1/ 1981 Population Census figures. It is estimated that due to under- enumerationin the census and subsequentgrowth the population of Karachi would be approximately6 million in mid-1983. Throughout this report 1981 census figures are used for comparativepurposes. - iii -

(c) Infrastructureand facilities in secondary cities are poor, as are transportand communicationsthroughout the rest of Sind;

(d) Development policy is inconsistent(vide tax incentives)and only partly under the control of the Provincial Government (vide historical decisions to locate federal institutionsin Karachi);

(e) Migrants to Karachi come predominantlyfrom NWFP and Baluchistanand not from Sind.

3. Dramatic changes in the regional imbalance cannot be expected in the short term as strong natural economic forces have led to the existing situation. Indeed, if not carefully consideredwithin a broader strategic context, attempts to alter the balance could result in misallocationof resources, with costly investmentsbeing undertaken in the rest of Sind with little or no benefit. A fundamentalproblem that needs to be addressed is reform in the agriculturalsector to lessen disparities in income distributionand encourage investment. Nevertheless, some other policy changes may have a limited impact in the longer term:

(a) Pricing of land and urban services should be improved in Karachi to better reflect costs and Provincial Government subsidiesreduced (see paras 11-15 below);

(b) industrial location incentives should be made more consistent with objectives,e.g., town and, in some instances, product specific;

(d) strategic developmentplans should be prepared for secondary and tertiary cities (see para 8 below).

InstitutionalIssues (paras 2.19-2.36)

4. In Karachi the main institutionalissue centers on the relationship between the Karachi MetropolitanCorporation (KMC) and the Karachi Develop- ment Authority (KDA). Various solutions for integratingthe functions of these two bodies have been considered by Provincial and Federal Governments, and some modificationshave recently been made in the institutionalrelation- ship.

5. A key aspect of the integrationproblem is the need for a mediumrterm (5-year) developmentprogram and budget to be establishedfor the Karachi metropolitanarea: A medium-term economic developmentprogram related to the capital and operatingbudgets of the agencies involved and complementedwith a strategicphysical plan for the area. The program, budgets and physical plan should be updated annually on a five-year rolling basis. This implies - iv - as a rainimumclose coordinationbetween KMC and KDA and other agencies (cantonments,Karachi Port Trust, Railways, Federal agencies, etc.), with probably some more formal links between these agencies. Such an approach would resolve the subsidiaryissues of greater accountabilityof KDA and linkage of KDA's developmentschemes with KMC's operating and maintenance responsibilitiesfor these schemes. A major step in this directionhas already been taken with the merger in February 1983 of KDA's water productionwing with the Karachi Water Management Board's (KWMB) distributionactivities and KMC's sewerage department,all under the Karachi Water and Sewerage Board (KWSB), an autonomousagency within the KMC. However, no single agency has yet been given the responsibilityfor overall urban planning, programmingand budgeitting,a concentrationof functions which remains highly desirable. 6. KMC's internal organizationis also under review. At present administrativedecentralization to local zonal managementcommittees would seem appropriatefor certain services. The present election system has only recently been establishedand it may therefore be premature to change this for a zonal election system until administrativedecentralization has been tested and found to work.

7. In the rest of Sind, the medium-term programmingand budgeting function is of equal importance. At the level of ProvincialGovernment this is already met by the ADP allocationprocess, although the role of the RPO in the process is not clearly defined. Its economic planning functions should be integratedmore formally into the WDPprocess.

8. There is no integrationof medium term programs at the municipal level with the ProvincialADP. Planning for the individualtowns in Sind needs to be strengthenednot just in terms of physical plans, but also in terms of economic developmentprograms and budgets, with the emphasis on resource mobilizationand cost recovery. Programs for income generation, particularlythrough promotion of small scale and agro-basedindustries, need to be prepared,as do strategic investmentprograms for each of the major regionialcenters. An appropriatemeans of achieving this would be through creation at the Provincial level of integratedteams of economists,financial analysts and physical planners which could prepare strategicdevelopment plans for each town.

Staffing and Training (paras 2.31-2.33 and 2.36)

9. Shortage of staff affects operationalefficiency in Provincial Governsmentand Municipal authorities,especially outside Karachi. There is a need for training,particularly in Municipal management, finance, economics and urban planning, and also manpower training for industry. The proposed Local GovernmentTraining Center in Karachi may improve the situation where training of municipal staff is concerned. An urgent priority should be an assessment of the most effective depLoymentof urban specialistsin local and ProvincialGovernment, possibly supplementedby use of consultantsand/or staff of experiencedagencies such as KDA to prepare action plans for provincial centers. Public Education/Awareness

10. The public needs to be made more aware of its role in supporting local authorities in the provision of municipal services. The realization that the level of service depends upon active public participationand payment for services will lead to improved cost recovery and strengthen local institutions.

Pricing and Urban Finance (paras 2.37-2.50)

11. The prices of many goods and services in Karachi are unduly low (i.e., below cost or market price):

(a) The free working of the pricing mechanism in regulating location of economic activity is distorted by subsidies:

(i) In Karachi, and to a lesser extent in other cities, public sector land and infrastructuredevelopment is underpriced, being sold at prices which are 5 to 10 times less than market value (see 12 below).

(ii) Municipal services do not achieve full cost recovery, especially water supply, which recovers only about half its costs, and sewerage and drainage, for which costs are not recovered at all. Tariffs need to be increased and efficiency improved to reduce subsidies, to enable capital investment to be serviced and to provide for needed expansion. In Karachi, the proposed IDA assisted Karachi Water Supply Project will make a start towards achieving these goals.

(iii) The level of Municipal resource mobilizationis low. Property tax assessment, which has not been revised for 15 years, in particularneeds to be revised.

(b) These subsidies favor growth in Karachi as against other cities. They appear to be facilitatedby intra-governmentaland inter- agency relationships,which favor grants to support losses, and by unclear definition of responsibilities(e.g. KMC provides health and educationalservices that have been taken over by Provincial Government elsewhere). A greater degree of cost recovery and municipal resource mobilizationwill enable financingof services to be achieved through loans instead of grants, which will reduce the burden on the Provincial ADP.

Land and InfrastructureDevelopment (paras 2.51-2.68)

12. There are striking anomalies between KDA's massive plot development program, averaging some 35,000 plots per year in recent years and peaking around 100,000 plots in 1982-83, and the continued growth of Katchi Abadis (squatter colonies)which house about one-third of Karachi's population. Contributoryfactors appear to be: - vri-

(a) land, which is mainly in the public domaine, and infra- structureare grossly underpricedin relation to market value, which may be 5 to 10 times as high as the KDA selling price;

(b) the plot allocation process has in the past been circumvented and restrictionson the number of plots owned have been ineffective,with the result that one person or family may own many plots which they hold as long term investments. Low-income groups lose out due to illiteracy and lack of awareness of opportunitiesand shortage of finance to enter the lottery;

(c) property tax and capital gains tax regulationsassist speculators to hold plots that they never intend to occupy and obtain a higher return on investment than is available elsewhere. Tenancy laws inhibit temporary productiveuse of plots through lease arrangements,since tenants cannot be evicted;

(d) Katchi Abadis on the other hand, attract migrants to the large areas of unused public land, providing some security, jobs and limited services, e.g., water supply, at virtually no cost, with the probabilitythat holdings will eventually be regularized.

13. As a result some 80,000 out of the 260,000 plots so far developed by KDA lie empty, as is the case with about 10,000 apartments. Some of these are nol:occupied due to lack of services,but the majority are held as investmentsby residents of Karachi, by overseas workers or by persons living in other provinces of Pakistan. Two main issues arise:

(a) waste of public sector resources through underpricingof land and infrastructure, which could yield substantialfinancial surpluses thereby improvingurban finance in Karachi; and

(b) failure to meet the shelter demand of low-incomegroups.

14. Solution to these problems might include some or all of the following actions:

(a) reduce the standards and size of low income plots to make them affordable to the lowest income groups without subsidy;

(b) through guided land developmentschemes, provide plots in locationsand with designs demanded by low-incomebeneficiaries, with special reference to tribal or ethnic groupings;

(d) sell medium, large and commercial plots at market prices to provide a financial surplus which might then be used to fund part of the Katchi Abadi upgrading program (this would require a change in KDA's statute);

(e) revise property tax and capital gains tax regulationsto discourage speculation;

(f) encourage private sector participationin area development and housing schemes;

(g) establish savings and loan institutionsto enable surplus funds, particularlyoverseas workers remittances,to be more productivelyused in the land and shelter development sector, especially through the provision of house building loan to low-income groups;

(h) increase the cost of squatting in Katchi Abadis by raising the price of regularizationof tenure and provision of services to achieve full cost recovery as specified in Martial Law Order 110.

(i) revise landlord-tenantregulations to permit owners to let accommodationfor a fixed period of time at a fair rent with the certainty of being able to repossess the property at the expiration of the leave.

15. Effective action on these issues will require much closer coordination than hitherto between KDA's area developmentwing and KMC's Katchi Abadi upgrading wing. Strengtheningof the linkage between these two agencies will be needed to ensure that plots of appropriatestandards, such as those embodied in KDA's incrementalplot development schemes, are provided in the right place at the right time to attract would-be squatters to areas that are acceptable to them and can be serviced at low cost. Essentially this requires a guided land developmentapproach, with provision of minimum standard plots and services,which can be upgraded to higher levels of service incrementally.

Water Supply and Sewerage (paras 2.69-2.76)

16. Water supply and sewerage are among the most critical issues facing Karachi and many of the secondary cities. In Karachi the water supply service is intermittentand uneven, in many areas only for two to four hours a day and sometimesonly on alternate days. The situation is improving as the Hub Dam scheme becomes operationalin 1982/83 and will further improve when the IDA assisted Karachi Water Supply project to augment the Indus supply goes ahead in 1984-87, but still not to the extent to fully satisfy the growing demand. In the secondary cities water supplies are generally inadequate and sometimes polluted, although the Provincial Government is making substantialinvestments to improve supply. In the immediate future, action program, to improve operationalefficiency, reduce water losses and establish - viii -

better billing and collectionprocedures are urgently needed in both Karachi and secondary cities to recover the costs of operationand maintenanceand meet debt servicingrequirements. One such program is a key element of the IDA assistedKarachi Water Supply Project. An importantaspect of the program is to reduce wastage through mains rehabilitationand leak detection and through metering of large consumers, possibly accompaniedby incentives to conserve water with a block tariff. A medium and long-term program also needs to be developed to augment water supplies and address sewerage and sanitationproblems in cities throughoutSind, particularlyin Karachi, where this processhas been facilitatedby the creation of an integratedKarachi Water and Sewerage Board (KWSB).

17. The sewerage problem is particularlyserious in Karachi, where the capacity of the two existing treatment plants is sufficientto deal with only a small part of the overall volume of sewage that pollutes the city, a situation which is aggravatedby the unregulateddischarge of industrialwaste. A study of least cost solutions for sewage treatment and disposal is urgently needed to develop a long term program and investmentplan to address the problem. An important element of any program would be the introductionof cost recovery by KWSB through a sewerage tax.

Urban TraEsport (paras 2.77-2.85)

18. In Karachi, the vast majority of the populationdepend on buses to travel within the urban area. However, the supply and quality of bus services are inadequate,and this is further exacerbatedby spreading traffic congestioncaused by the rapid increase in car ownership. If current population and car ownershipgrowth rates were to continue,Karachi will have a population of nearly 10 million in the early 1990s, which could be using as many as half a million cars if growth were unrestrained (vs 33,000 in 1975). It is thus high time to address priority issues and to develop a long-term transport strategy. To improve the transport situation,the followingmajor issues need to be addressed as a priority:

(a) Create incentivesthrough the fare structure,route licensing and small loans program which encourage existing private and public transport operators to enhance the supply, quality and efficiency of their services.

(b) Develop a comprehensiveapproac:h to traffic management, including bus priorities,parking, traffic safety and capacity improvements at intersections.

(c) To achieve progress, the currently fragmented institutional set-up needs to be revised, possibly by forming a single traffic and transportagency or strategicallylocated department.

Sind Urban Development Strategy and Programs (paras 3.01-3.18)

19. The programmingwork outlined in paras. 5-8 above would help define a strategy to address the issues summarizedin this section. Scarcity of - ix - resourcesand the non-additionalityof foreign aid to the ProvincialADP suggest that Sind's urban strategy should focus mainly on policy, institutional and financial issues. The main objectiveswould be to increase resource mobilizationand make more efficientuse of existing resources involved in the provision of urban infrastructureand services. Provincial government'sobjective of more balanced regional development could be pursued by achieving a greater degree of self-sufficiencyfor Karachi, through mobilization of tax resources and recovery of costs for area developmentschemes and urban services, coupled with infrastructuredevelopment in selected secondary cities. Encouragementshould be given to private sector involve- ment in developingactivities in the rest of Sind that are linked to Karachi. Improvementsin the institutionalframework, better capital budgeting and physical planning and manpower training programs should be key elements of the strategy. While physical componentsmight initially be small and simple to ensure their effective implementation,particularly in secondary cities, the policy issues addressed should have a much wider impact and should be consideredas part of a longer-termprogram. Studies and technical assistance programs should be included to develop policy and institutionalissues and to prepare the way for an expanded and replicableurban program.

20. An immediateaction program, in which the Bank and other donors might assist, should address these issues and might include the following components:

(a) Institutionaland financial strengtheningprograms for Karachi and secondary cities, particularlyresource mobilization,pricing of services and training;

(b) Strategic developmentprograms for secondary and tertiary cities;

(c) Guided land developmentand Katchi Abadi improvementschemes in Karachi, Sukkur and Hyderabad. In Karachi the emphasis should be on removing existing constraints to occupancy before further expanding supply;

(d) Technicalmanagement of municipal services, particularly solid waste management and infrastructureprovision and maintenance in Karachi and other cities;

(e) Transport and land use study for Karachi, including improvement of the Master Planning process, training of traffic engineers and traffic police, traffic improvementschemes and upgrading of public transport services.

(f) Study of the least cost solutionsfor sewage treatment and disposal in Karachi, including review of low cost sanitation systems in new developments. SIND URBAN SECTOR MEMORANDUM

I. BACKGROUND

1.01 Pakistan is still a predominantlyrural-based society, with only 28% of its total populationof 87 million (mid-1982estimate) living in towns of more than 5,000 inhabitants. Urban growth has deceleratedfrom about 5% per year in the 1950s and 1960s to 4.4% in the last intercensalperiod (1972-81). Despite this slowdown, Pakistan'stowns are still growing by more than one million persons per year; about 360,000 of this annual increase in city dwellers are in Sind, the southernmostof the country's four provinces.

A. The Province of Sind

1.02 The Province of Sind forms the major portion of the great Indus plain and includes the last 950 kilometers of this river before its mouth on the Arabian Sea coast. It accounts for almost 18% of Pakistan's land area and 23% of its population. The climate is hot and dry, and, apart from the irrigatedand fertile strip extendingup to 80 kilometers from the river, the land is arid and includes a vast desert stretching into India.

1.03 Historically,Sind has functionedmuch as an independent,isolated province since its location was distant from the main axes of communication in South Asia. Until 1935 it was part of the Bombay Regency and thus had closer links with the Bombay region than with the other provinces that are now part of Pakistan. It became a separate province in 1935, but soon after Independencein 1947 was merged into the single province of West Pakistan with its provincial capital in Lahore. Only in 1970 did Sind resume its provincial status.

Urban Growth

1.04 Independencewas a major breakthroughin the economic developmentof Sind, with massive implicationsfor its settlement pattern. Although Karachi had thrived during World War II as a important air base, its growth acceleratedafter Independencefor two major reasons. First, it became West Pakistan's only seaport and the nation's new capital (until 1959, when this function was transferredto Islamabad). Second, it was the major destination of Moslem refugees from India. As a result, its population rose from 436,000 in 1947'to 1,150,000in 1951. Moreover, the post-Independencedevelopment strategy strongly emphasized industrializationbased on import substitution, and this reinforced the growth of Karachi, partly because it was the most attractive location for such industries and partly because the neglect of agriculture resulted in high rates of rural-metropolitanmigration.

1.05 Thus, Sind province developed a strongly primate urbanizationpattern which was not moderated until the 1960's when the "green revolution"stimulated higher agricultural production and improved yields and hence helped the -2- villages and smaller towns to grow. As a result, towns in the size class range of 25,000-50,000have been growing faster than most larger towns. Nevertheless,this did little to moderate the growth of Karachi, but there was a marked drop in the growth rates of the next largest cities, Hyderabad and Sukkur. 1/

1.06 Today, Sind remains a province of sharp contrasts between the cos- mopolitan industrial and commercial capital of Karachi (5.1 million inhabitants),2/ and the rest of the province, still heavily dependent on subsistenceagriculture. Only Hyderabad (0.7 million) and Sukkur (0.2 million) have developed as sizeable commercial centers, but these are growing slowly. The other district headquartersare smaller and perform the same functions as in the colonial era, namely as tax-collectionstations and as suppliers of basic services such as health and education. Most of the other towns in Sind are located on or near the national highway and/or the railway line and function primarily as agriculturalmarketing and service centers (see Map 16536).

Karachi

1.07 It would be difficult to argue that Karachi, with only some 6% of the national population, is a primate city dominating the rest of the country, in the strict sense of the word. Nevertheless,its economic weight is much greater than its population size would suggest. For example, in 1972 it accounted for 15% of Pakistan's gross domestic product; 42% of value-added in large-scalemanufacturing; 35% of employment in large-scale manufacturing; 50% of bank deposits; 72% of capital issued; and 25% of federal revenues. Its domination of Sind province is yet more extreme: while it has one-quarterof the provincial population, it has over three-quartersof average daily reported manufacturing employmentand it accounts for over three-quartersof value added in manufacturing.

1.08 Despite Karachi's economic vitality, it faces a host of critical problems. In 1978, 26% of the city's households lived on less than Rs 600 per month, defined as the threshold of absolute poverty. 3/ Average availability of water is about 37 gallons per capita per day; 40% of households have water connections,but many of these provide water for only

1/ Between the 1972 and 1981 censuses, both Karachi and the 25,000-50,000 towns grew by an average of 4.5% per annum, Hyderabad by 2.6% and Sukkur by 2.3%. The total urban population increased by 4.4%; this, however, includes the population of 19 previous villages that were added to the urban group as the towns passed the 5,000 mark. If an adjustment is made to exclude these towns, the average growth rate drops to 4.2%.

2/ According to the 1981 census, although it is widely believedthatthere was significantunderenumeration in the census and that the population of Karachi is nearer 6 million in mid-1983.

3/ M. B. Abbasi, Income DistributionPattern in Sind (Sind Regional Plan Organization,Karachi, 1982). --3- two to four hours during the day. About 29% of all households are connected to the sewerage system, but only a small fraction of all biological waste is being treated. About 1.8 million people live in squatter slum communities where health and education services are inadequate. There are also serious deficienciesin Karachi's mass transportationsystem, and this is accompanied by rapidly worsening traffic congestion.

Hyderabad and Sukkur

1.09 The second and third largest cities in Sind, both located on the Indus, have a more historical characterthan Karachi. They are the natural focal points for the southern and northern parts of the province and function as div:isionalheadquarters for these sub-regions. Hyderabad (745,000 inhabitantsin 1981) is Pakistan's fifth largest city; Sukkur (193,000)ranks fourteenth. Despite their central locations, they grew more slowly than Karachi during the past three decades, at average rates of 4.0% and 3.1% per annum (Karachi grew at 5.7%).

1.10 Near both cities, major barrages have been built in the river to divert water into the extensive system of irrigation canals of the lower Indus valley. The hinterland is largely agricultural, with sugar, cotton and rice being the principal crops. To some degree, Hyderabad has benefited from Government policies to de-emphasizeKarachi's growth: new industries have become establishedin nearby Kotri, and the University of Sind was shifted there in 1951. Nevertheless, both Hyderabad and Sukkur have stagnated economically and subsist largely on a traditional economy of small commerce, artisanry and personal services.

The Smaller Towns

1.11 Besides the three principal ciities, there are seven towns in Sind with populations over 50,000. With the exception of the surprisingly industrial Tando Adam, they are district headquartersand perform essentially administrative and commercial functions. Accounting together for 642,000 inhabitants,their average growth (4.0% per annum) has been slightly below the provincialurban average. The 14 towns with populationsbetween 25,000 and 50,000 persons grew as fast as Karachi, by 4.5% per annum, to a total of 469,000. Towns below that size grew an average of 3.9%; if the populations of newly graduated towns are included, the 95 towns in that category account for slightly less than one million inhabitants.

B. Institutional and Financial Framework

1.12 Annex 8 gives a brief description of the Government institutions that are directly involved in urban development. Within the urban sector, the federaL ministries are primarily concerned with policy issues, the provincial departments with planning and financing of infrastructure projects, and the municipal authorities with the day-to-day running of the cities. 4-

Federal Institutions

1.13 Most national policies on urban affairs originate in the Environment and Urban Affairs Division of the Ministry of Housing and Works which is currently coordinatingtwo major urban planning exercises: (1) the development of a National Human SettlementsPolicy and (2) the examination of systems for planning, development and management of cities.

1.14 For the first exercise, a committee was formed at the federal level to suggest measures that would improve "the situation in the field of urbanizationand human settlements". It met first on September 16, 1981, and includes high officials from the federal and provincial governments,and the developmentauthorities in Karachi, Lahore and Quetta. The main objectives of the Committee'srecommendations were started to "provide perspective and indices for future plans", and to formulate a National Human Settlements Policy with a view to reducing the rate of migration from rural areas to cities.

1.15 The Committee's second main task addresses the management of cities. It is to examine the existing system of city management, planning and developmentand make recommendationstoward (a) institutionalimprovements, (b) land use/master plan procedures, (c) financial self-sufficiency, (d) technical staffing, (e) land policies, (f) procedures for scheme formulation and approval, (g) role of private sector in city development, (h) federal-provincial-localcoordination, and (i) federal and provincial assistance.

1.16 In addition to the definition of policies, the federal level is also engaged in (a) budgetary and (b) operationalactivities. The former includes the National Economic Council and the Central DevelopmentWorking Party, which have to approve all major public investments. The latter includes such entities as Cantonment Boards, Karachi Port Trust and Pakistan Railways, which have a major influence on the planning and management of Karachi (as well as many other cities).

Provincial Institutions

1.17 In Sind, two departmentsof the Provincial Governmenthave responsibility for urban affairs. One is the Department of Town Planning, Housing, Local Government and Rural Development,which, apart from overseeing municipal institutions,is responsible for town planning and the conversion of agriculturalland to urban use. The second is the Planning and Develop- ment Department,which must approve all major public investmentsand the allocationof resources between sectors.

1.18 Another important entity concerning itself with urbanizationissues is the Sind Regional Plan Organization (SRPO). Reporting to the Planning and Development Department, it is responsible for preparing a provincial master plan. This work has begun in 1976 with assistance from UNDP, but has yet to be concluded. Nevertheless, SRPO's findings point toward a policy of promoting secondary towns while aiming to reduce Karachi's growth. -5-

Divisional Level

1.19 Some of the provincial government functions are performed on the basis of the three divisions into which Sind is sub-divided: (a) Karachi; (b) Southern Sind with headquartersin Hyderabad; and (c) Northern Sind with headquartersin Sukkur. The Karachi Division covers the area of Karachi District, whereas the other two divisions comprise six districts each. The Divisional Commissioners,supported by coordinatingcommittees, are responsible to the Governor for the activities of the Provincial Government at that level.

Local Institutionsin Karachi

1.20 The Karachi Municipal Corporation (KMC) and the Karachi Development Authority (KDA) are the two principal bodies of local government. In addition, the recently created Karachi Water and Sewerage Board (KWSB), an autonomous agency under the KMC, is responsible for water production and distribution and sewerage functions previously performed by KDA, by the Karachi Water Management Board (KWMB) and by KMC.

1.21 KMC reports to the Mayor and a Council of 167 members. Its functions include (a) public health service; (b) constructionand maintenanceof roads, bridges, street lights and traffic signals; (c) primary schools; (d) medical services; (e) recreationalservices; (f) fire fighting; (g) social welfare; and (h) upgrading of Katchi Abadis (slums).

1.22 KDA was created in 1957 and is, unlike KMC, a non-representative body. Its functionsinclude (a) land developmentand housing; (b) flood protection;(c) town planning and traffic engineering;and (d) environmental control.

Local Institutionsin Secondary Towns

1.23 The local government structure in Hyderabad is analogous to that of Karachi, with a netropolitancorporation (HMC) and a developmentauthority (HDA) sharing responsibilitiesfor urban management and development. In addition, Sind has one more municipal corporation (Sukkur), 22 municipal committees,and numerous town committees. At the level of the 13 districts into which the Province is divided, there are coordinatingcommittees which include representativesof municipal and town committees.

Government Finances

1.24 The Federal Government has the first call on taxable resources under the Constitution,although the other two levels of Government are able to raise taxes and other revenues. Federal Government is also by far the largest spender at the provincialand local levels, even if many of the federal programs are not intended for local consumptionin any geographically determinateway. It is estimated that somewhat in excess of a half of public expenditure in the city of Karachi is made by the Federal Government. This does not include resource transfers from the federal level down, which are also considerable. Indeed, two-thirds of Sind's expenditure is met by grants and loans from the Federal Government, and this dependence is growing. -6-

Sind's finances are in difficulty, having deteriorated throughout the 1970's. The main problems arise from the statutory responsibilities to provide services and undertake developments coupled with a narrow and diminishing revenue base (see Annex 9).

1.25 With regard to municipal finance, both KDA and KMC have been facing major problems. In the case of KDA, these stemmed mainly from its water supply functions (now transferred to KWSB), for which the operating and debt service expenses were considerably higher than the water tariff revenues. The potentially profitable land development operation is required by law to be executed for each scheme on a breakeven basis, which means that residential units are allotted to beneficiaries at a fraction of the prevailing market price. The resulting overall deficits are covered by borrowing from banks and the Provincial Government.

1.26 At KMC, about 56% of total revenues depend on octroi 1/ (mostly on maritime imports) and 10% on property tax. Expenses of road maintenance, sewerage and solid waste removal far exceed tariffs and taxes received for these services and absorb almost half of KMC's total general revenues (1982/83). Thus, resources are very limited for meeting current and development expenditures on education, health and other services (paras 2.37-2.50).

1.27 A major problem is the fact that the property tax has not been reas- sessed for many years. In addition, until recently 50% of the property tax receipts were taken by the Provincial Government although this has now been reduced to 15%. Water rates and a series of other charges and fees are linked to the property tax and, as a consequence, are extremely low. (Water rates have just become delinked from property valuations in 1982, see para 2.39.) These tax base problems, together with the absence of general municipal service cost recovery targets and an aggressive net non-profit making land development strategy have combined to create the growing financial shortfalls facing Karachi.

C. Urban Land and Shelter

1.28 Since Independence, Karachi has grown by about 650,000 households, and is now expanding at a rate of about 33,000 households per year. The combined growth of the next nine cities in Sind has been about 150,000 households since Independence, with a current annual expansion of about 7,000 households. It is thus not surprising that Karachi, in contrast to most secondary towns, has developed the institutions and expertise to provide housing and building plots on a massive scale. The achievements have been impressive in recent years, and 50,000 to 100,000 building plots are now being produced annually. However, Karachi also has by far the largest squatter settlements of the Province. Referred to as katchi abadis, these house about one-third of Karachi's population (about 257,000 households) in generally unsanitary conditions.

1/ A tax on goods entering, and consumed or processed within the city. -7-

1.29 At first sight, the housing problem of the secondary towns would appear less acute than that of Karachi. However, at least in Hyderabad and Sukkur, a greater part of the population lives in katchi abadis, and the production of building plots in these cities is minisculewhen compared to Karachi. Thus, the poor housing conditionsand prospects in the smaller towns are likely to be a contributingfactor for rural-to-urbanmigrants to move straight into Karachi rather than Hyderabad or Sukkur. This is, of course, in direct conflict with the Government policy to de-emphasizegrowth in Karachi.

Recent Legal Developmentsin the Housing Sector

1.30 In its efforts to improve housing conditions, the Government of Sind has passed several laws in recent years, including:

- Sind Building Control Ordinance, 1979 - Sind Disposal of Plots Ordinance, 1980 - Martial Law Order (MLO) 110, 1979, amended in 1982 - Martial Law Order 130, 1980 - Sind CooperativeHousing Authority Ordinance, 1982.

1.31 The Sind Building Control Ordinance (see Annex 11) establishes the following Government controls: (i) requirement of no objection certificate for Societies selling or allotting building plots, (ii) approval of building plans and construction supervision of public buildings, (iii) inspection of buildings under construction,(iv) approval of price at which builders can offer any building, (v) identificationand demolition of dangerousbuildings, (vi) licensingof architects, engineersand surveyors. The building authoritiesappointed for the enforcement of this Ordinance are KDA for Karachi, HDA for Hyderabad, Sukkur Municipal Corporationfor Sukkur, and the provincial Department of Housing for the remainder of Sind.

1.32 The Sind Disposal of Plots Ordinance concerns schemes developed by Government agencies such as KDA, HDA and Municipal Committees. (i) It establishes 60 square yards as the minimum and 600 square yards as the maximum size of residentialplots. (ii) It stipulates that all commercial plots and residentialplots over 400 square yards must be auctioned. (iii) It permits the allotment of sites for apartment buildings to constructioncompanies at a reserved price and without public auction, if they constructunits of 700 square feet or less of covered area for people of low-income groups at a price determined by Government. (iv) It establishes the following rules for allotting residentialplots up to 400 square yards:

20% of 60-80 square yard plots are reserved for "shifties", i.e. persons evicted from lands occupied by them.

60% of 60-80 square yard plots ) are allocated to the general 75% of 81-120 square yard plots ) public by computer ballot. 65% of 121-400 square yard plots ) -8-

- The remaining plots are allotted by ballot to professionals, outstandingsportsmen, artists, poets, authors, men of letters, overseas Pakistanis, serving and retired Government servants and their widows and orphans.

1.33 MLQ 110 entrusts the regularization (i.e., provision of 99-year leases to squatters) and upgrading of katchi abadis to the local councils, which must prepare schemes for the rehabilitationof katchi abadis, leasing of plots and recovery of lease money and development charges. The order also specifies the setting up of a revolving fund to recycle recovered costs. To qualify for regularization,a katchi abadi must have been occupied since before January 1, 1978; more recent squatter settlementswould be treated by the law as unauthorizedencroachments.

1.34 MLO 202 authorizes the removal of encroachmentstogether with structures. In 1981, about 15,000 encroachmentswere removed. The evicted squatters are offered alternate plQotswhich they must, however, accept within 24 hours.

1.35 The Sind CooperativeHousing Authority Ordinance establishesa Sind CooperativeHousing Authority (SCHA) which aims to reorganize and supervise the activities of defaulting cooperativehousing societies in the province. The authoritywill be empowered to ballot members and inquire into corrup- tion, inefficiencyand mismanagementwhich has grown as a consequenceof rapid constructionactivity, particularlyin Karachi.

OrganizationsActive in Land Development

1.36 The principal suppliers of building plots and, to a lesser degree, apartments are the DevelopmentAuthorities of Karachi and Hyderabad. The municipal authoritiesare responsiblefor katchi abadi upgrading throughout the province and, in Sukkur and six of the remaining seven cities with more than 50,000 population,are also engaged in major plot development schemes.

1.37 Private constructionfirms have also been vital in producing apartments for sale, especially for middle and high-incomehouseholds in Karachi. Moreover, a great number of cooperativehousing societies exist. Some have acquired from Government large land tracts, but have not yet developed building plots on any major scale. Nevertheless,development is said to be imminent in Karachi (Scheme 33: 140 housing societies to provide 70,000 plots) and in Sukkur (16 housing societies to provide 4,000 plots). Most housing for the lowest income groups is provided through the informal sector.

1.38 On the financing side, the House Building Finance Corporation (HBFC) is the only institution in Pakistan providing long-term loans to individuals for the constructionof houses. It also participatesin the financing of housing schemes by lending to DevelopmentAuthorities. The recent growth of HBFC's lending has been impressive,averaging 35% per annum over the past four years. However, its lending program for 1981/82 amounted to only Rs s50 million nationwide;Sind's share (assuming allocation according to population) is estimated to be equivalent to about 4,500 house building loans, which is small in relation to the growth in urban households of about 40,000 per year (see para 1.28). -9-

1.39 A more important source of housing finance is the remittancesof overseas workers, some 22% of which, according to a recent survey, is invested in real estate. As the average annual remittance of each of the 1.25 million emigrant workers is about Rs 30,000, the annual investment in real estate from this source amounts to about Rs 8 billion, or about ten times the size of the lending program of HBFC. The share attributableto Karachi is not known, but is almost certainly disproportionatelylarge judg- ing by the vast numbers of apartments built for the overseas workers market, either for personal accommodationor as a speculativeinvestment, the latter probably accounting for a large part of the unoccupied apartments in Karachi. Overseas remittanceswere a major contributingfactor to the building boom and soaring house prices in Karachi in the 1970s. These resources could be more productivelyused if they were channelled through some form of savings and loan institution (buildingsociety). The recent slump in house prices in Karachi should make this type of investment more attractive. There is an urgent need for Government,which is studying this matter, to take action to establish savings and loan institutionsfor housing finance.

Town Planning

1.40 The Government of Sind is placing increasing emphasis on the planned growth of towns in the province. It is proposing to prepare master plans for each of the major towns along theslines of that done in Karachi. The progress made to date in this directionmay be summarized as follows:

- In six towns, outline developmentplans are in the initial stage of preparation.

- In eight towns, aerial photographyand mapping have been completed, and in nineteen towns surveys and mapping are underway.

1.41 Town planning in Sukkur and all smaller towns is the responsibility of the provincial Town Planning Departmentwhich, however, is chronically understaffed. KDA and HDA are responsiblefor the master plans in Karachi and Hyderabad. The former was formu:Latedin 1974 after an extensiveplanning exercise which had received assistance from UNDP. Although that plan was approved by KDA, few of its recommendations have been implemented,and it is now considered to be out-of-date.

Infrastructureand Housing Supply and Demand

1.42 Until recently, little emphasis was given to the organized provision of land for low-cost housing, especially outside Karachi. Except for two projects in 1953 (Hyderabad: 11,000 plots, and Mirpur Khas: 1,000 plots), no major schemes were implementedin the smaller towns between Independence and 1978. There has, however, been a drastic improvement in the last few years, as is evident from Table 1. The achievementsof Karachi, discussed under the next heading, are especial:Lyimpressive. In addition, there are now projects underway in eight of the nine secondary cities with over 50,000 population. -10-

Table 1: Infrastructureand Housing Supply and Demand

Districts Karachi Hyderabad Sukkur Others

Urban population in 1981 (000's) 5,353 955 338 1,809 - of which in principal city 95% 83% 57%

Annual growth in urban households /a 32,800 3,400 1,800 13,200

Average number of plots developed annually by Government and housing societies

1947-1978 6,450 370 0 40 1979-1980 41,600 3,100 2,200 800 1980-1981 /b 122,000 52,500 4,000 77,300

Households in Katchi Abadis /a 257,000 43,000 14,000 32,000 - proportion of total households 34% 31% 30% 12%

/a Assuming average household size of 7.0. lb Developed and under development. Numbers probably overstate achievements.

1.43 Nevertheless,the backlog of housing needs is great, and about one-third of the urban population in the districts of Karachi, Hyderabad and Sukkur lives in katchi abadis. The population of katchi abadi residents is likely to be even higher in the cities of Hyderabad and Sukkur (as the small towns in the districts of the same name are unlikely to have one-third of their people living in katchi abadis).

1.44 The upgrading and regularizationof katchi abadis is slowly progress- ing in Karachi and some secondary towns. Tenure, in the form of 99-year leases, is given to residents for a one-time payment, ranging from Rs 4 to 25 per square yard. 1/ Serviced plots in KDA's schemes are sold at Rs 50 per square yard; the smallest plots cost Rs 3,000 and are affordable to 85% of the population. KDA and HDA also build apartments and sell them at cost; although these are referred to as low-income flats, less than half of the population is able to afford them. In addition, KDA is developing apartments which are sold to Pakistanis living abroad at prices up to Rs 500,000.

Plot Developmentin Karachi

1.45 Apartments for middle and high-income households have been built in great numbers by private developers. Partly in response to complaints about certain practices by the private firms, KDA has become involved in this area, but only to a comparativelyminor extent (about 3,000 units); it plans to

1/ Informal land transactionsin Karachi's Baldia Katchi Abadi were executed at Rs 50-60 per square yard (1978). -1 1- withdraw from that activity in the long run and then concentrateon land development. Here, numerous types of developmenthave been defined (and some of them implemented),including:

- Metrovilles - Serviced plots - Incremental plot development - Redevelopment of Lines Area - Industrial labor housing.

1.46 The metroville program was a major componentof the Karachi Develop- ment Plan 1974-85. Introducingthe new concept of utility walls for plugging in water, sewerage, electricityand gas connections,it addressed the needs of low-income families and encouragediincremental and self-help building to match the families' budgets and priorities. A total of 182,360 plots were to be provided by 1985, and Metroville 1 (4,131 plots) was implementedin 1976 at an excellent location near the Sind IndustrialTrading Estate. It was well prepared, and the plots were rapidly sold. However, due to problems with the plot allocationprocess (see paras 2.62-2.65),only a few plots have been occupied and today Metroville I gives the impressionof a vast open space lying at a prime location between the industrialzone and a fully occupied settlement which was planned on the basis of guided land development.

1.47 The 1974 master plan also recommendedthat 148,420 open plots be provided by 1985, to be served by community water taps and baths, sanitary latrines, paved central roads, street lighting and storm water drainage. It appears that well over 100,000 plots have been, or are currentlybeing, developed. They are largely allotted by computer ballot.

1.48 Incrementalland developmentis an approach which is now being promoted by KDA to cope with Karachi's housing backlog. In the near future, about 100,000 minimum-costplots will be provided,whereby the development work will consist only of the demarcation of plots, levellingof main roads and provision of community water taps. In later stages, as families move into the area, other services such as sewerage, street lighting, etc. would be added.

1.49 In the centrally located Jacob Lines area, where a great number of wooden barracks had been built as military quarters during World War II, about 20,000 persons were living in slum conditions during the last 30 years. Under the overall supervision of a Board headed by the Governor,KDA is now redevelopingthe area in stages to provide commercialfacilities as well as 20,000 plots with all infrastructureservices for the resettlementof affected families. The project is of particular interest because of the mechanisms to cross-subsidizeland prices in this commerciallyattractive area: low-income residentialplots (45 square yards) are sold at 35 Rupees per square yard to previous residents of the area, while commercialland is sold at 1,500 to 5,000 Rupees per square yard. -12-

1.50 Industrial labor housing has been developed by KDA on behalf of the Labor Department of the Provincial Government. In addition to nearly 2,500 apartments and 1,000 nucleus houses, about 10,000 plots for workers have been provided near various industrialareas.

Katchi Abadis in Karachi

1.51 Most of Karachi's katchi abadis were originally establishedby immigrant groups, although the oldest and largest, Lyari, seems to have had an indigenous origin. The rest retain strong ethnic or tribal characteristics according to the different origins of their occupants, which include refugees from India at the time of Partition (1947), refugees from former East Pakistan (Bangladesh,1970) and migrant workers from Baluchistan,NWFP and the tribal areas.

1.52 As shown in the table below, Lyari (and the adjacent Translyari) is by far the most populous and densely populated katchi abadi. It is an old settlement near the city center and was to be upgraded under an IDA credit proposed in 1976 which, however, was never signed because of local funding difficultiesand cost recovery problems. A plan has been formulated to improve the Baldia Township with Dutch aid, and some work is already under way with financing from KMC (which is also slowly upgrading the Lyari area).

Katchi Abadis in Karachi (1978)

Hectares Population (000's)

Lyari and Translyari 878 717 Gulbahar and Golimar 292 190 Baldia 405 150 Orangi 729 130 Others 1,701 461

4,005 1,648

1.53 Despite KDA's plot developmentprogram, the katchi abadis are spreading by about 120 hectares annually, and their population is said to grow by up to 200,000 persons per year. 1/ If this is so, this would represent a growth rate more than twice that of Karachi or, in other words, nearly Karachi's entire population growth would be accommodatedby katchi abadis.

1.54 In line with Martial Law Order 110, KMC is now upgrading and regularizing katchi abadis at a planned rate of about 10,000 households per year. About 72% of the settlements have been declared regularizable;the remainder presumablyconsists of (i) structures on land required for roads and other services and (ii) buildings that sprung up after January 1, 1978. As shown in Annex 15, KMC's improvementobjectives appear quite realistic in view of the size of the problem and the resources available. They aim at (1) security of tenure through legalizing the occupancy of residents, (ii)

I/ Landmark,April-May 1981, published by Karachi Development Authority. -1;3- upgrading of overall conditionsthrough provision of basic urban infrastructure at lowest possible cost, (iii) full recovery of upgrading costs by charging sufficientlyfor the 99-year leases that residents receive as part of the regularizationprocess, and (iv) affordablelease rates for low-income residentialplots, to be achieved through a cross-subsidyfrom much higher lease rates charged for industrial and commercial land.

D. Urban Services

1.55 Due to its size, economic vitality and geographicallocation, Karachi holds a unique position in the province with regard to the provision of urban services. While, for example, most secondary towns are relativelyclose to the Indus, Karachi lies 100 miles from that river and thus requires its water to be brought from far away. Also, transportation(which presents few dif- ficulties in the smaller towns) has been identifiedas one of the three most acute problem sectors in Karachi, together with water supply and sewerage, and housing.

Water Supply

1.56 Rainfall in Sind is low and access to groundwateris therefore limited except in the vicinity of river beds. The supply of drinking water often utilizes the province'sextensive system of irrigation canals and is comparativelycostly. As a consequence,few households receive water for more than half of the day, and this falls to as low as two hours per day in some sections of Karachi. Nevertheless,Karachi receives more water per capita than the other towns in Sind, as shown in the following table. This corresponds to three-quartersof Lahore's per capita water supply, where 50 1/ gallons per capita are produced daily.

Piped Water Supply in Gallons=pr Day

Total a/ Per Capita b/ (millions)

Karachi 190 37 Hyderabad 19 25 Other towns with more than 5,000 population 57 24 a! Includes transmissionand distributiornlosses. bI Includes transmissionand distributionlosses and industrial and non-domesticconsumption.

1.57 With Karachi's growth, the scarcity of water has become ever more acute, with water rationing now being a permanent feature. To increase bulk

1/ Includes transmissionand distributionlosses and industrialand non-domesticconsumption. -14- water supply, a scheme to supply 89 mgd of water from the Hub River is near- ing completionand an IDA assisted Karachi Water Supply project to augment the Indus supply by some 60 mgd over the period 1984 to 1987 has recently been approved.

1.58 Karachi's water distributionsystem includes about 3,100 kilometers of mains, 42 pumping stations, about 350,000 house connections (i.e., about 35% of all households have direct water supply), and 11,335 community standposts (i.e., one for every 300 persons not living in a household with direct water supply). Since demand exceeds production,large portions of the system are regularly unpressurizedand supplies become polluted as a result. The difficulty of pressurizingmains is aggravated by the fact that many consumers have invested in "on-premise"storage both at ground and elevated level, to take advantage of all available water and to regulate their own supplies over 24 hours; some have even installed suction devices to draw from the mains when gravity flow conditions persist. This pattern of consumption is not conducive to equitable or economic use of water in a situation of scarcity and, furthermore,individual underground storage units are also a potential source of pollution.

1.59 Despite its proximity to the Indus River, Hyderabad provides even less drinking water to its residents than Karachi. Steps have been taken to correct this situation, and a Rs 576 million scheme is currently being implemented with financial assistance from the Asian DevelopmentBank, providing a credit of $22 million. The scheme will raise the daily water production to about 56 gallons per capita, substantiallyhigher than the levels achieved elsewhere in Sind.

1.60 In Karachi, Hyderabad and Sukkur, much of the water distribution system is old, and leakages from the pipes further aggravate the scarcity of water. The ADB-assistedscheme in Hyderabad does in fact also aim to improve the city's water distribution(and sewerage) system, while the IDA assisted project for Karachi would aim to rehabilitatemuch of the trunk distributionsytem and reduce water losses.

1.61 In the smaller towns, where fresh groundwater often exists, water has traditionallybeen supplied by hand pumps. Responding to a new policy to emphasize better water supply in these secondary towns, provincial fund allocations for this purpose have recently been quadrupled compared to the 1970-77 average. As a result, about 100 water supply and sewerage schemes were completed from 1978 to 1981, as many as had been implementedin the preceding 17 years. The production of piped drinking water in these towns has thus been raised to the same level (per inhabitant) as currently prevailing in Hyderabad. This achievement,however, has also raised some new issues. Much of the newly supplied water is unfiltered and is said to have caused some health problems. Also, town administratorsresponsible for water supply often lack training and support staff, leading to inadequatemaintenance of the new facilities. -15-

Sewerage and Drainage

1.62 The provision of sewerage facilities is closely connectedwith water supply, and thus most of the schemes mentioned in the preceding section include sewerage components. Drainage is of particular importanceat some locations near the Indus, where the silting-up of the river has raised the groundwaterto high levels. As a consequence,water logging is now encroach- ing on several established settlements;this problem is particularlyacute in Hyderabad and Khairpur.

1.63 Hyderabad's sewerage system is typical for conditionsencountered in some of the secondary cities; it consists mostly of open street drains dis- charging into ponds, from where the effluent is pumped into an irrigation canal. Piped sewerage facilities exist in two residential sections,with a combined population of about 100,000. This piped system has encountered great maintenanceproblems, including disappearanceof manhole covers and clogging of the pipes through garbage and sand. As there are no separate storm drains, most run-off enters the sewerage system, which has only a limited spare capacity. Following heavy rains in 1970, 1973, 1976 and 1978, there was severe flooding which was accompaniedby overflowingmanholes and stagnant sewage ponds. The crisis was particularlygrave after two separate periods of heavy rainfall in 1978, resulting in a large-scalecollapse of houses and extensive damage to roads. About Rs 13 million had to be spent for the cleaning of the system on an emergency basis, and an additionalRs 7.5 million scheme is now underway to further improve the sewers.

1.64 Of the other secondary towns, only nine had any (open or piped) sewerage systems before 1978. With the recent Government emphasis on improved sanitation,this has now been increased to 22 towns. The provincial Public Health Department is implementingschemes itnanother 46 towns; this still leaves about 80 towns with more than 5,000 inhabitantseach without any form of proper sanitary drainage.

1.65 Karachi's sewerage system includes about 1,860 kilometers of sewers and over 160,000 house connections. Overall, about 29% of propertiesare connected to the main system, 4% to a local system or septic tanks, 25% are served by non-effectivesystems and some 42% are completely unserved. Part of the sewerage is treated in two plants, built in the 1960s, which have a combined capacity of 40 million gallons per day. However, most of Karachi's domestic sewage finds its way untreated to the most convenient water-course. The resulting pollution is further aggravatedby the unregulateddischarge of industrial liquid waste.

Solid Waste Management

1.66 The collection and disposal of solid waste is the responsibilityof municipal authoritieswho, in the smaller towns, commonly have this task handled by private contractors. The collectionservices are generally rudimentary,and the few sewers and drains existing in smaller towns are often clogged by refuse. There have been instances in which underground sewers were abandoned only a few years after their constructionand replaced by open sewers which are easier to clean. -16-

1.67 In Karachi, over 18,000 sweepers are employed by KMC to cover a collection area of nearly 2,000 square kilometers. KMC owns a fleet of 142 five-ton trucks (average age 4.6 years) and 15 tractors to remove the garbage to a single dumping ground more than 30 km from the city (in addition, a contractor with 35 vehicles is responsible for solid waste removal, but not sweeping, from a 140 km2 area). However, only 63% of KMC's trucks are on the road and, because of the great distance to the dumps, perform only an average of three round trips per day. As a consequence, only one-third of the 4,500 tons of solid waste generated in Karachi per day are properly removed, the remainder lying uncollected or placed in unofficial dumping areas in the city. In general the service is deficient and the operation inadequately funded (see para 2.41).

Traffic and Transportation

1.68 Karachi is the only city in Sind where transport presents any major problems. While it accounts for 27% of the provincial population, fully 78% of all motor vehicles registered in Sind are based in Karachi District. In the secondary towns, -where distances are shorter and economric conditions less buoyant, most people still walk or bicyle, and animal-drawn vehicles are common.

1.69 Although private motorizationhas been rising rapidly in Karachi, from about 65,000 cars and motorcyclesin 1975 to iiearly200,000 in 1981, at least 75% of all households still depend on public transport -- primarily buses and minibuses -- to cover distances which are too long for walking. However, worsening traffic congestion caused by rising car ownership has been reducing the speed (and thus the productivity)of the buses which are therefore unable to meet demand and have become increasinglyovercrowded. Public transport services are now inadequate and are widely considered to be one of Karachi's principal problems.

1.70 About 28% of all full-size buses are owned and operated byy the Federal Government-ownedKarachi Transport Corporation (KTC); the remainder are privately owned and provide either regular stage services (43%) or contract transport (29%). In addition, there are a great number of privately owned minibuses, which account for about a quarter of the total passenger carrying capacity of public road transport. The following table summarizes the 1981 compositionof vehicles as well as the average annual increase over the past five years:

Number of Average Annual Vehicles (1981) Increase (1976-81)

KTC buses 799 18% Private buses, stage services 1,256 6% Private buses, contract services 852 19% Minibuses, 13 seats 1,972 ( Minibuses, 26 seats 1,073 ( 12% Taxis 5,784 5% Autorickshaws 14,102 9% Cars (1980) 83,856 26% Motorcycles (1980) 99,569 25% -17-

1.71 Pakistan Western Railways operate some urban passenger trains, but the rail lines are not well located with regard to travel demand; moreover, tracks have to be shared with freight services, and commuter trains run only every half hour or even less frequently. As a consequence, the railways are not a major factor in providing public transport for Karachi's population.

II. ISSUES AND OPPORTUNITIES

A. Regional Development

2.01 Karachi accounts for 62% of Sind's urban population, but in terms of economic strength and vitality its importance is much greater. As Pakistan's only port and principal commercial center, it has attracted immigrants and investment from the entire nation, while the secondary towns in Sind have been stagnating. Its growth has been accompanied by expanding slums, severe water shortages, spreading traffic congestion and generally worsening conditions of urban services, but living conditions are even worse in the secondary towns where few resources have been expended to improve the urban infrastructure.

2.02 The growing discrepancy between the economically thriving metropolis and its comparatively backward hinterland has become a primary preoccupation of the Provincial Government. Policies are now emerging which aim at deflecting some of the future urban growth away from Karachi toward the smaller cities, taking advantage of the province's economic strength to benefit those regions which had been left behind. Government investments to improve urban infrastructure pass, by and large, through the Provincial Annual Development Plan (ADP) and thus reflect official policies on urbanization. Therefore, while a discussion of the urban sector in Sind will, to a large degree, deal with Karachi's specific problems, these must be seen in the context of the overall urban system of the province.

Distribution of City Sizes

2.03 Karachi's exceptional growth has been largely due to its national functions, and therefore it will be useful to assess city sizes first in the national context before focussing on Sind. Map 16535 shows Pakistan's 29 cities with more than 100,000 inhabitanats (1981); only six of these are in Sind, and 19 are in Punjab. The distribution of city sizes is much more gradual in the Punjab than in Sind. Also, all 19 large cities in the Punjab grew faster between 1972 and 1981 than Sind's second and third largest cities -- Hyderabad's annual growth rate was 2.6%, that of Sukkur 2.3% while that of Karachi (4.5%Y)slightly above the national urban average of 4.4%.

2.04 The slow growth of Sind's two ,principal centers after Karachi was already apparent in the previous intercensal period (1961-1972). Hyderabad (3.2% per annum) and Sukkur (3.7%) also then grew more slowly than the nationa:l urban average (5.1%) and Karachi (6.3%). These trends illustrate the widening gap between Karachi and the secondary provincial centers in Sind. There are some small towns in Sind that grew well above average, such as Mirpurkhas (5.0% in 1972-1981), Larkana (6.6%) and Shadadpur (7.9%). As -18-

shown on Map 16536, however, these towns are relatively small and not located as well as Hyderabad and Sukkur to become effective as growth poles competing with Karachi. 1/

Economic and Social Contrast

2.05 A major difference between Karachi and the secondary towns lies in the employmentpattern. About 36% of Karachi's non-agriculturalemployment is in manufacturing,construction and public utilities, 30% in commerce and transportation,and 34% in other services. No comparabledata are available for the secondary towns, but it is evident that manufacturingplays a less important role in them, and that employmentrelates to the traditionalsub- sector of the economy far more than is the case in Karachi. 2/

2.06 Looking at Sind as a whole, the percentage of industrialto total employmentis just above the national average (14%). Once Karachi is excluded, this percentagedrops to about 5%. It can be concluded that the secondary towns of Sind are relativelyunder-industrialized when compared to the towns outside the province.

2.07 The contrast between Karachi and the secondary towns repeats itself when income characteristicsare compared (see Annex 7). As shown in the following table, the distributionof income is more equal, and the incidence of poverty is lower, in Karachi than in the secondary towns. This in itself helps to explain the relativelyhigh populationgrowth of Karachi.

Income Distributionby Income Class in Sind

Monthly Income Percentage of Households Percentage of Income in Rupees (1978) Karachi Other Urban Rural Karachi Other Urban Rural

Less than 600 26 41 66 24 14 34 600 - 1500 38 36 26 36 30 38 1500 - 3000 29 12 7 27 22 20 More than 3000 7 11 1 13 34 8

100 100 100 100 100 100

2.08 The income comparison illustratesclearly the acute duality problems of Sind. In addition, there are wide differentialsin employment opportunities, housing conditions,education standards,power availability,etc. The regional disparitiesare consideredby many to be undesirable and should, in the view of the ProvincialGovernment, be modified to reduce the imbalance. The rural income distributionis also shown for comparative purposes, highlightingthe differencesbetween Karachi and the rest of Sind.

1/ See Annexes 2 to 4 for a more detailed discussion of urban population growth.

2/ See Annex 5 for a review of Karachi's economic position in Sind and Pakistan,and Annex 6 for a review of employmentcharacteristics in Sind. -19-

The poverty of the rural areas surroundingthe secondary cities is another factor contributingto the low level of urban developmentand one that needs to be addressed through agriculturalreform and incentives to invest in rural areas and provincialtowns.

2.09 To lessen the imbalance in the secondary cities, it is critical to address the manufacturingsector, which has a multiplier effect on the level of total employment,and which is vital to spur the transitionfrom a traditional to a modern economy. Karachi accounts for 77% of the province'stotal formal employment in manufacturing,and this share would be even higher if the industries located just outside the Karachi district boundarieswere taken into consideration. This concentrationof manufacturinghas persisted despite the following Government efforts to encourage new industries in smaller towns:

(a) Restriction on the establishmentof new factories in Karachi, particularly those that require much water (but see (f) below; the steel mill uses about 25 mgd).

(b) Import duty relief and 5-year tax holiday for new factories in three interior districtsof Sind.

(d) Efforts of the Sind Small IndtustriesCorporation to promote small-scaleindustry in the Province.

(e) Attempts by IndustrialDevelopment Bank of Pakistan to disperse loans away from Karachi.

2.10 On the other hand, there were several Governmentdecisions which run counter to a policy of de-concentration. These include:

(f) Building of new State-ownedsteel mill in Karachi District.

(g) Building of new port at Bunder Qasim.

(hI Establishmentof Karachi Free Trading Estate/Export Processing Zone.

(i) Import duty relief and tax incentivesfor Baluchistan,which have spurred the industrialgrowth at Hub Chowki (in Baluchistan, but only 24 km from Karachi's center).

(j) The principalincentive for new industries--importduty relief-- is attractive to capital intensive industries requiring machinery and equipment produced abroad. It is of less interest to small scale and agro-based industries,which are precisely the type that are most likely to be attracted to secondary towns.

(k) The selection of the three districts for the incentives mentioned under (b) above negated much of the potential these Incentives might have had for attracting industriesinto the interior of - 20-

Sind: Two of the districts, Jacobabad and Shikarpur, are extremely isolated and therefore unlikely to attract footloose industry. The third district, Dadu, stretches from the northern part of Sind to an area half-way on the Karachi-Hyderabad superhighway. Not surprisingly, it is here, less than one hour from Karachi, that industries are establishing themselves, while there are prac- tically no new industries in northern Dadu. This trend is further reinforced by the establishment of a 2000 hectare industrial estate near the superhighway.

(1) The new Karachi-Hyderabad superhighway itself, opened to traffic in 1968, has been blamed for attracting into Karachi some developments that might otherwise have occurred in Hyderabad.

2.11 Industrial growth has generally been constrained by the short supply of capital; this constraint is least severe in Karachi, and this in turn tends to spur further industrial concentration nearby. To counteract this factor, the Industrial Development Bank of Pakistan has made some attempts to regionally disperse its loans. Substantial disbursements were made to Khairpur in support of its declining industrial base, but otherwise they largely went to districts adjacent to Karachi.

2.12 Apart from Kotri near Hyderabad, industrial development in the Province's interior has been exceedingly low. Worse yet, at least one nucleus of industrial activity away from Karachi has declined, leaving behind a large estate of abandoned factories (Khairpur). There is no question that many secondary towns failed to attract industrial investment for such reasons as unreliable power supply, poor telephone communications, inadequate transport conditions, scarcity of managers and skilled labor, and lack of industrial support services. The importance of these factors relative to each other and vis-a-vis capital availability and Governient incentives is yet to be determined for each location where industrial growth is to be promoted. The continuing sluggishness of Sind's secondary cities, despite a basic policy to de-emphasize Karachi's growth, raises the question whether Government incentives and certain of its investments should not be con- centrated on one or two cities with economic take-off potential rather than diluting the efforts among too great a number of secondary and tertiary towns.

Alternative Dispersal Strategies

2.13 Experience in Sind and elsewhere shows that Government policies cannot achieve a substantial and quick change in metropolitan growth. But even the reduction by only one percentage point in Karachi's annual population growth rate would mean that two million people less would be living there in the year 2000 than would otherwise be the case. While it may be possible to influence Karachi's growth to a certain degree, even the reduction of the growth rate by only one percentage point would require concerted Government efforts, based on a clearly defined policy, which would probably have to include a large number of controls on Karachi as well as promotional incentives in the rest of Sind. It is also by no means clear that reduced growth in Karachi would lead to increased growth in the rest of Sind. Capi- tal and labor, if faced with controls, are more likely to be attracted to the -21- more developed cities of Punjab. It would therefore be preferable to minimize negative controls and emphasize the positive aspects of regional growth policy. Possible spatial strategies for promoting regional growth would include:

(a) Continuationof a general policy to strengthensecondary and tertiary towns throughout the province. This approach, it is felt, has not been particularlysuccessful in the past.

(b) Promotion of growth in a sma'Llnumber of regional centers, such as Sukkur and Hyderabad,.

(c) Promotion of satellite cities near Karachi, at a distance of at least 50 km. These might include Dhabeji-Gharoand Thatta (both of which were designated as growth poles in the 1974 Karachi DevelopmentPlan), and a future community around the new industrial estate near the Karachi-Hyderabad superhighway(see para 2.10). Hub Chowki is too close to Karachi to fall into this category of satellite towns, and will eventually merge into the built-up area of the metropolis.

2.14 This last strategy (c) might be most attractive to industrial inves- tors who would value Karachi's proximity to the new growth centers. For this reason it should be relatively easy to implement,and may be a necessary first stage in promoting growth outside Karachi. But, while it would reduce Karachi's growth and some of the associated difficultiesin providing services to the metropolis, it would fail to spur development in the northern part of the province and thus be ineffective in reducing the duality problem of the regions in Sind.

2.15 The designation of a small number of growth poles, strategy (b), would most likely focus on Sukkur and Hyderabad. Both are divisionalhead- quarters (Karachi is the third); expanding institutionalresponsibilities at the divisional level of Government - and relocating some provincial Govern- ment offices to Sukkur and Hyderabad -- would strengthen the central functions of these cities. Further actions to reinforce them as commercial centers would include improved road and telephone connectionswith their hinterlands and any measures that would entice banks, trading firms and agriculturalsuppliers to establish (or expand) their branches in the two cities.

2.16 In addition to giving industrial incentives to Sukkur and Hyderabad, which might necessitate removing these incentives from some of the districts that enjoy them now, a clear two-pole strategy would imply greatly increased emphasis in Government expenditures(and locational decisions regarding health and higher education) for Sukkur and Hyderabad -- at the expense not only of Karachi but also of smaller secondaryand tertiary towns. The provincial Government would have to reach agreement as to what degree such a shift in emphasis is desirableand achievable over a long enough period. An answer will also have to be found to the key question whether disincentives to new industries in Karachi would divert investments to secondary cities in Sind or beyond the borders of the province to other more developed cities in the Punjab. -22-

Opportunitiesfor Action

2.17 While reducing Karachi's growth is widely accepted as desirable, there is no agreement on a regional growth strategy. Past policies on regional developmenthave been diffuse and often contradictory. Moreover, many Government decisions with a strong impact on economic growth are made outside the province (e.g., steel mill, Baluchistan tax incentives). As a consequence,Karachi has continued to expand rapidly, while the traditional regional centers of Sind have been growing more slowly than any other city of similar size in Pakistan.

2.18 The Sind Regional Plan Organization(SRPO), with assistance from UNDP, has collectedan impressive amount of data on social and economic characteristicsin the province. It has also published several analyses on specific issues, but has not yet come to any conclusionson viable options for a development policy that could be adopted by the provincial Government. SRPO's analytical work should be concluded as soon as possible, and thus help Government to reach a decision on a coherent policy to promote more balanced regional growth.

B. InstitutionalFramework

2.19 The previous section mentioned a possible policy to strengthen Government functionsat the divisional level; this was seen in the context of a concerted effort to promote the regional centers and applied in principle to all agencies of the Provincial Government. This present section focusses on those departments and agencies that are responsible for managing cities and towns. 1/

Urban Management in Karachi

2.20 The lack of coordination and division of responsibilities between the various agencies and government departments represents a major constraint on the effectiveutilization of Karachi's resource base. Thus, while KMCis responsiblefor the provision of municipal services to all parts of the city and for the upgrading of the katchi abadis, KDA is the land development, housing and planning authority, receiving its directives from Provincial and, in some instances,Federal Government.

2.21 Other agencies active in the metropolitanarea include (a) the newly created Karachi Water and Sewerage Board; (b) the Karachi Regional Transport Authority whose responsibilitiesinclude the licensing of all modes of transport and the setting of public transport fares; (c) the Karachi Transport Corporationwhich provides bus services; (d) about 560 cooperativehousing associations; (e) the Cantonment Boards; (f) the Federal Board of Industrial Management, responsiblefor heavy industry; (g) two Industrial Trading Estates and the Small Scale Industriesand Handicraft Corporation;(h) the Pakistan Public Works Department; (i) Pakistan Railways; and (j) the Karachi

1/ See Annex 8 for additionalinformation. -23-

Port Trust. Despite several coordiniatingcommittees, there are considerable problems of harmonizing the activities of these agencies. The principal issue, however, centers on the relationshipbetween KDA (a financiallypower- ful organization,thanks to its land developmentfunctions) and KMC which has the obligation to supply urban serviicesfor the KDA schemes from its own limited resources.

2.22 This issue was examined in detail by the Sub-Committeeon Effective City Administration,which was set up in 1980 upon directivesfrom Pakistan's President. The sub-committeereviewed the existing planning, development, maintenanceand management systems, identified deficienciesin various services and suggestedmeasures for improving the metropolitanarea's administration. Its report was submitted in September 1981 and is currently under review by Government. 1/ In its assessment of Karachi's existing characteristics, the Sub-Committeeidentified the following major problem sets 2/:

(1) deficienciesand scarcities in the delivery of urban services to the population,

(2) socio-economicand geographic inequalitiesin the distribution of urban services,

(3) inefficiencieswithin local government organizations,

(4) narrow and unfair taxation base,

(5) lack of machinery to implement provisions of Karachi Master Plan and to enforce planning requirements and standards,

(6) lack of coordination between the various Federal and Provincial Government departments, civic agencies and autonomous bodies operating in Karachi, and

(7) constitutional, financial and administrative weakness of local government.

2.23 The sub-committeerecommended that KMC should be granted jurisdiction over the entire metropolitanarea. Functioningunder it as semi-autonomous authoritieswould be KDA with responsibilitiesfor land development,housing, planning and building control; and a Water and SanitationAgency with responsibilities for water supply and sewerage, including the collection of service charges. Part of this proposal has recently become effective with the creation of KWSB, but the major change of assigning KMC the role currently fulfilled by Provincial Government in respect of KDA has not been implemented.

1/ A Committee under the Chairmanshipof Justice Musrat has also been appointed by the Provincial Government to advise on inter-agencycoor- dination. The Committee'sReport has been submitted to the Governor of Sind.

2/ See Annex 10. -24-

This would effectively integrate the metropolitan developmentplanning and control with the maintenance functions under one authority and enable KDA to use any surplus revenues that might arise from improved pricing of area developmentschemes to improve low income areas.

Urban Management in Secondary Towns

2.24 Although several governmentdepartments and agencies are active in the secondary towns, no formal mechanism exists to coordinate their activities. Of particular concern is the fragmentationof development responsibilitiesat the municipal level between the municipal Committees and Provincial Government Departments,and the separation of the maintenance function, which is the responsibili^tyof the municipalities.

2.25 The Provincial Department of Town Planning, Housing, Local Government and Rural Developmentis responsible for the preparation of master plans for all 142 towns outside Karachi and Hyderabad. 1/ Apart from being the planning authority for these towns, the Department also acts as the housing agency outside Karachi and Hyderabad, preparing and assisting in the execution of housing programs and schemes for local municipal councils. Responsibility for the planning, design and execution of water supply, sewerage and drainage schemes rests with the Provincial Department of Public Health which also comes under the Secretary of Local Government.

2.26 The planning and investment priorities of the town councils outside Karachi and Hyderabad are channelled through a series of District and Divi- sional CoordinatingCommittees to the relevant ProvincialGovernment Depart- ment. These Departments are responsiblefor working up the schemes and for their inclusion in the Provincial ADP.

2.27 Significantly,although the Department of Local Government is responsible for the preparation of town master plans in Sind (except Karachi and Hyderabad), the statutory authority for their implementationrests, at least in principle,with the Municipal Councils. The Department is so chronically understaffed,however, that only a handful of master plans have been prepared, while the Municipalitieslack the financial resources, qualified technical staff and administrativeknowledge to implementmajor public works. These problems are compounded by the independentactivities of provincial governmentaldepartments and agencies operating at the provincial level. It is not at all clear, for example, how the planning and implementationof the Department of Industry's three-year small sca'leindustries development plan and particularlythe estates developmentprogram is to be integrated with the overall planning process at the Municipal level. If the program is likely to call for additional infrastructure investment or shelter provision, it needs to be determined whether Provincial Government or Municipalitywould be responsible for its provision.

1/ Analogous to Karachi, a Hyderabad DevelopmentAuthority exists which is responsible for town planning and land development. -25-

ComprehensiveProgramming and Budgeting

2.28 The division of responsibilitiesbetween KDA and KMC has led to a severe imbalancein Karachi's municiipalfinances, which is one of the causes of poor service delivery by KMC. As no single agency has responsibilityfor the metropolitanarea's overall developmentplanning, programmingand budgeting, and as schemes are often not evaluated sufficiently, recurring liabilitiesare not normally related to the metropolitanarea's resource base at the planning stage.

2.29 There is a critical need for a medium-term (5-year) development program and budget, encompassingcapital and operating budgets of the agencies involved and complementedwith a strategicphysical plan for the area. As the program, budgets and physical plan should be updated annually on a five-year rolling basis, close coordination would be required between KMC, KDA and other agencies (cantonments,Karachi Port Trust, etc.), with probably some more formal links between these agencies. Such a system would resolve the subsidiary issues of greater accountabilityof KDA and linkage of KDA's development schemes with KMC's operating and maintenance responsibilities for these schemes.

2.30 In the rest of Sind, the medium-term programming and budgeting function is of equal importance. While the Department of Local Government is responsible for such functions as physical planning, control of the municipal councils,and policy formulationand implementation of schemes for housing and public health, it is the Physical Planning and Housing Section of the Planning and Development Department which prepares the relevant parts of the Annual Development Programme (ADP). There are established lines of coordination between this Section and the line departments of provincial government.

Staffing and Training

2.31 Due to a lack of qualified staff, the Department of Town Planning, Housing, Local Government and Rural Developmentis neither able to prepare master plans for the towns outside Karachi and Hyderabad nor is it able to give enough assistance in the implementationof such plans. This, combined with the staffing problems of the municipalities,severely limits the scope for improving the existing deficienciesin the delivery of urban services at the local level.

2.32 Generally, the shortage of sufficient suitably trained urban specialistsrepresents a major constraint to effective city management and administration. There is an acute slhortagein the fields of public administration,management and finance, urban economicsand planning. No urban management, finance, economic or planning courses are offered at the University of Karachi, and the only national source of urban specialists is the Lahore University of Engineeringand Technology,which produces between 10 and 20 town planning graduates each year. Although the Pakistan Civil Service Academy, AdministrativeStaff College and National Institute of Public Administrationprovide initial and mid-career training,none offers courses in urban affairs, urbanizationor regional policy.

2.33 It is difficult to see how these human resource constraintscan be overcome in the short term through any increase in the supply of qualified -26- staff, although new urban courses, if not institutions,are clearly a major priority. What is urgently required, however, is an assessment of the most effectivedeployment and use of those urban specialistscurrently in local and provincial government employment, possibly supplemented by use of consultants to prepare action plans for provincial centers. This requirement reinforces the argument for a rationalization of the existing institutional/organizationalarrangements and responsibilities.

Opportunitiesfor Action

2.34 In Karachi, the report of the Sub-committeeon Effective City Administrationis a useful basis from which to introduce institutional refonms. Decisions on such reforms should be expedited, particularlywith the objective of rationalizingthe functions of development,operation and maintenance. In the planning of capital investments,a comprehensiveview should be taken of their medium-term effects on the overall finances of the metropolis, including cost of capital, recurring costs and cost recovery.

2.35 At the provincial level, the ADP should be prepared within the context of a 5-year capital investment program which takes into account the recurring costs of operationand maintenance. Also, RPO could begin to play a stronger role in the ADP allocation process, thus safeguardingthe implementationof a regional development policy, for which it has established the analytical base.

2.36 To alleviate the shortage of qualified urban specialists,the proposed Local Government Training Center in Karachi could become a key to the long-term solution. In the meantime, however, available manpower should be utilized where it is most urgently needed. Particularlyin the secondary towns, the preparation of developmentprograms (rather than "town plans") and the implementationof schemes will require additional expertise. This could be brought in through consultants and/or joint ventures between implementing agencies and entities that have already acquired substantial experience (such as KDA).

C. Pricing and Urban Finances

2.37 It was mentioned in Section II-A above (para. 2.10) that a number of public sector actions actually run counter to the Provincial Government policy of de-concentration. A further factor favoring the growth of Karachi has been the subsidy of public sector services, which has distorted the free working of the price mechanism in regulating the location of economic activity. The major areas of subsidy are:

(a) underpricingof land and infrastructuredevelopment; -27-

(b) failure to achieve anywhere near full cost recovery for Municipal services such as water supply, sewerage and drainage,and public transport;

2.38 The problems associated with the underpricingof land and infrastructure in Karachi and other cities are describedin Section D below. The availabilityof large areas of serviced land at a fraction of their market value has certainly been a major attraction of Karachi; it has also placed a growing burden on the Municipal Corporation to supply and maintain services at uneconomic prices.

Pricing of Public Services

2.39 Water is the prime example, in Karachi, of an expensive commodity being underpricedor given away, the latter through about eleven thousand standpostsand tanker services to Katchi Abadis. The tariff was, until the beginning of 1982, based on property values as assessed for the purposes of urban property tax, at the rate of 6-1/2% of annual rental value (ARV). Since ARVs had not been revalued since 1968 while costs had escalated,the tariff covered less than half of the cost of water supply and distribution. In 1982 the tariff was changed to one based on floor area, which, it is estimated, will bring about some increase in revenue, although probably not enough to cover full costs.

2.40 There is no specific charge for the sewerage and drainage services provided by the KMC, the expenses of which are met out of the general revenues. The rapid rise in these expenses, from Rs 49 million in 1979-80 to Rs 150 million in 1982-83budget has resulted in considerationbeing given to levying a sewerage tax.

2.41 Garbage collection services in Karachi are supposedly financed out of the ConservancyRate, which is levied on householdsat the rate of 5% of ARV. But the costs of providing the service (Rs 126 million in 1982-83 budget) are about four times the revenue collected (Rs 36 million in 1982-83 budget), the balance being made up from general taxes.

2.42 Public transport in Karachi has been subsidized by the Federal Governmentowned Karachi Transport Corporation (KTC), which charges tariffs to cover between one-third and two-thirdsof its costs. As a result of low tariffs, KTC has been losing about Rs 50 million per year for the past three years. KTC was transferredto the Provincial Governmentin November 1982 and the Federal Government subsidy will cease in July 1983.

2.43 Not all public services are subsidized. Electricity,provided by the Karachi Electric Supply Corporation (KESC), is sold at tariffs which cover its costs, including debt service and some provision for expanding the system. Natural gas, on the other hand, is sold at highly subsidized rates. Although these rates are applicable throughoutPakistan, gas is not always available in the secondary towns of Sind. -28-

Urban Finance

2.44 The underpricingof urban services has placed a considerable burden on the KMC's budget. The total deficit on its water distribution,sewerage and drainage services (Rs 195 million in 1981/82, Rs 155 million in 1980/81) exceeded the overall deficit on its whole budget (Rs 157 million in 1981/82, Rs 128 million in 1980/81). That the situation is not worse is largely due to the buoyancy of the octroi tax, the mainstay of KMC's revenue. Octroi revenues have increased by 22% per annum over the past five years and now amount to Rs 550 million (1982/83 budget). Total revenue has, however, risen less rapidly largely because of the low levels of cost recovery for services and the low yield from property tax, which has not been reassessedsince 1968.

2.45 The undervaluationof property for purposes of levying the general property tax has also affected the revenue yield of conservancy and fire rates, as these are directly linked to property values. These taxes are collected by the KMC, whereas the property tax is assessed and collected by Provincial Government. This has several disadvantages:

(a) there is unnecessary duplication of effort;

(b) KMC's records are not kept up-to-date with those of Provincial Government;

(c) the Provincial Government may have less incentive to update valuations and expedite collections,since it now hands 85% of property tax over to the Municipal authorities.

There is a strong case for centralizingthe valuation and collection of all property tax and associated taxes in the KMC.

2.46 Most urgent, however, is the need to revalue properties for property tax purposes and to continue to revalue on a regular basis every four or five years.

2.47 Despite the poor state of its finances,KMC has been receivinga decreasingamount of assistance from Provincial Government in the form of grants and ADP loans. In 1980/81 a total of Rs 2.5 million was provided for two water supply and sewerage schemes and Rs 5 million 1981/82.

2.48 This does not mean that the Provincial Government is not investingin Karachi. On the contrary, it has provided substantial assistance to KDA for water supply and sewerage schemes and has invested in education and health facilitiesin Karachi which fall within its responsibility. About Rs 170 million or 14% of the 1981/82 ADP was devoted to Karachi, of which the largest elements were assistance to KDA for the Hub dam scheme and the Greater Karachi Sewerage scheme (see Table 2.2). But the main thrust of the ADP is to the rural sector (about half), with the balance being directed towards the seconidarycities in Sind. It is these secondary cities that have the least in terms of own resources and are in greatest need of Provincial Government assistance. - 29 -

Table 2.1(a)

KMC Budget 1981-82 (Rs Millions)

DETAILS OF CIJRRENTRECEIPTS

Revised Budget Actual Estimate Estimate % of Source 1979-80 1980-81 1981-82 1981-82

1. Octroi 285.40 341.18 410.00 56 2. Share of property tax '53.68 70.00 75.00 10 3. General tax 1.62 0.89 0.51 - 4. Water tax 35.73 40.78 94.23 13 5. Rent of land and buildings, shops, and markets 6.50 7.75 11.81 2 6. Conservancy rate 20.13 19.62 28.36 4 7. G-rant for primary schools 9.50 10.20 10.20 2 8. Fi:retax 6.39 5.73 8.44 1 9. Share of betterment tax 7.04 9.00 10.00 1 10. Advertisement tax 4.02 4.69 5.13 1 11. Show tax 0.75 0.88 1.76 - 12. Vehicle tax 0.13 0.04 - - 13. Mi!scellaneous receipts 27.86 39.69 75.68 10

TOTAL 458.75 550.45 731.12 100

Table 2.1(b)

KMC Budget 1981-82 (Rs Millions)

SERVICE-WISE DETAILS OF CURRENT AND DEVELOPMENT EXPENDITURE

Service Current Development Total %

1. Public Health 102.24 5.89 108.13 12 2. Communications (Roads, Bridges, Street Lights and Traffic Signals). 64.28 154.96 219.24 24 3. Water Supply Service 92.49 72.39 164.88 18 4. Drainage & Sewerage Service 29.46 94.41 123.87 14 5. Educational Service 60.87 0.60 61.47 7 6. Medical Service 40.37 10.13 50.50 5 7. Recreational Service 23.61 37,58 61.19 7 8. Fire Fighting Service 8.12 5.70 13.82 1 9. Social Service 7.33 7.69 15.02 2 10. Municipal Secreteriat, Revenue Collecting Dept. including Debt Charges 63.03 24.70 87.73 10 TOTAL 491.80 414.05 905.85 100 -30-

Opportunitiesfor Action

2.49 The opportunityexists to strengthen Karachi's financial self sufficiency, while at the same time furthering the deconcentrationpolicy of Provincial Government, by starting to charge more realistic prices for the services provided to the residents of Karachi. This would involve further review of the new water tariffs plus implementationof a sewerage and drainage charge to meet the costs of providing these services. The IDA assisted project in the water supply sector includes an operationalaction plan to improve KWSB's efficiency and lead to financial self-sufficiency. At the same time there should also be an immediate reassessmentof property values for the purpose of property tax, coupled with a mechanism for continued review and updating at regular intervals.

2.50 There is a need for similar actions to be undertaken in the secondary cities, to lessen the burden on the ProvincialADP. A first step might be to review the resource base of the secondary towns to ascertain the levels of service that can be provided and maintained without recourse to Provincial Government subsidy.

D. Urban Land and Shelter

2.51 As outlined in Section C of Chapter 1, building plots (and apartments) have been provided on a large scale in Karachi, but many of these remain vacant while katchi abadis are spreading. In the secondary towns, few low-income plots are being provided (although this may change soon in Hyderabad), and housing conditions in general are probably worse than in Karachi. This is true of Hyderabad and Sukkur, which have the highest proportion of slum dwellers in the province. It thus appears that in these smaller towns the principal shelter concerns relate to the production of low cost plots, while in Karachi it is more their allocationand use that are at issue. Moreover, throughout the province, the program of upgrading and regularizingexisting katchi abadis progresses too slowly and, at the current pace, could not possibly be completed before the end of this century (without even consideringthe new katchi abadis that have been springingup since 1978 and will continue to do so in the future).

Growth of Katchi Abadis in Sind

2.52 In 1981, the total katchi abadi population was estimated at about 2.3 million in the Province of Sind (representingabout 13% of the total population). Katchi Abadis contained about 1.8 million persons in Karachi; 270,000 in Hyderabad; and 70,000 in Sukkur. They are expandingat annual rates of perhaps 60,000 in Karachi; 6,000 in Hyderabad; and 2,000 in Sukkur 1/; the katchi abadi improvementprogram advances at about the same pace, at least in Karachi. In other words, current trends indicate that the total number of persons living in unimproved katchi abadis remains more or less constant despite the objectives of Martial Law Order (MLO) 110.

1/ These are very approximate estimates based on overall population growth rates and data on katchi abadis in the districts of Sind. - 31 -

Table 2.2

Sind Government Annual DevelopmentProgram 1981-82 (Rs Millions)

Urban /3 Total Rural /3 Karachi Other Towns

1. Water (Irrigation) 100 100 2. Agriculture 148 148 3. Physical Planning: Aid to KMC 5 5 Aid to KDA /1 103 103 Aid to Hyderabad /2 84 84 Aid to Other Towns 39 39 Katchi Abadis 6 6 Urban Water Supply 46 46 Rural Water Supply 52 52 Government Housing 24 7 17 Government Offices 27 4 23 4. Industry :12 2 10 5. Education 168 20 30 118 6. Health 1(0 15 10 75 7. Communications 269 244 5 20 8. Miscellaneous _ _. 11 4 7

Total 1,194 579 170 445

% 100% 49% 14% 37%

/1 Of which Hub Dam Scheme 60. 12 Of which Asian Development Bank Water Supply Project 83. 73- The rural/urbansplit is indicative only as in some cases the location of projects is not identifiablefrom the budget description. -32-

2.53 MLO 110 requires the creation of a revolving fund for the upgrading of katchi abadis, to be fed from lease sales to beneficiariesand government grants. There are clearly difficultieswith the cost recovery from beneficiaries, particularly if they already had to (informally) purchase their plot from a previous occupant. As quoted from a paper prepared by a member of the Dutch Technical Assistance mission to Karachi, 1 the residents' willingness to pay for the leases was assumed to "be high because:

(a) obtaining a lease would increase de-facto security of tenure substantially;

(b) residents would feel they were getting their money's worth because infrastructuralimprovement of their area would be carried out simultaneously with preparations for regularization (such as physical surveys, individual cadastral plot measurements, administrative procedures);

(c) a high level of residents' participation in improveement and regularizationplanning would ensure agreement of the residents with the plans utimately adopted;

(d) there was the prospect of being able to use lease titles as collateral for loans.

2.54 The assumption of willingness to pay for these reasons has proved to be a tenuous one. Regularization of land tenure and actual issue of leases are only the final stages in the process of consolidatingde-facto security of tenure. In Karachi particularly, large-scale evictions had already become unlikely before KMC introduced its slum improvement policy. This was further reinforced by the Government announcementon January 1, 1978 that all katchi abadies in existence at that time would be regularized unless the areas were subject to hazards like frequent floods or would otherwise be required for public purposes.

2.55 This means that not much can be expected from regularization as a mechanism to stimulate private home improvement. Although it has been shown in a number of studies that the level of de-facto security of tenure is positively related to residents' investments in home improvement, regularization in the circumstances described above means only a marginal increase in the level of de-facto security of tenure, A related question is the status of the dwellings that have been erected in katchi abadis since January 1978. According to M4LO 110, these structures are illegal and would have to be removed as unauthorized encroachments. In Karachi alone, this would affect 200,000 to 300,000 persons. It is, however, unlikely that the law would be enforced on any large scale, particularly in view of the past history: squatter settlements have, in most cases, been eventually legalized.

1/ Emiel A. Wegelin, The Economics of Land Tenure Regularization in Katchi Abadi Improvement, Amsterdam Free University, December 1980. -33-

2.56 In these circumstancesthe most effectivemeans of managing the growth of Katchi Abadis would be through guided land development,with demarcation of plots for would-be squatters in appropriate locations (possibly on the fringe of existing squatter areas) and potential for incrementalprovi- sion of services at a later stage.

Use of Plots in Karachi

2.57 This past experienceand the abundance of unimproved and uncultivated Government land in the outer parts of the metropolitan area, may help to explain why the katchi abadis are growing while so many KDA-providedplots remain unused. It is estimatedthat 80,000 to 100,000 plots lie vacant, although they had been sold off without difficulty; in addition, about 20,000 apartments are empty. The empty plots and apartmentsare evidentlyheld as investments, but their non-utilizationrepresents an enormous waste of economic resources: no benefits are derived from past investments which could have been used to house as much as 40% of Karachi's slum population in adequate sanitary conditions. A prime objective should be to transformthese idle assets to productive use.

2.58 Land speculation in Karachi is not a new phenomenon. The 1974 master plan report states that in 1979, 5,000 hectares of developed land lay vacant (or about 40,000 relatively large plots). It continues that "Karachi is one of the very few urban areas which retains public ownership of extensive amounts of land. But this extraordinaryasset is not used...." The same is true today, although much land has been given away in the meantime at a fraction of its market value. This, and issues related to the plot allocation process, are discussed in the fol'Lowingsections.

Pricing of Land

2.59 KDA must currently sell its plots on a no profit/no loss basis. It pays a nominal transfer charge to the provincial Government for the raw land (Rs 2 per square yard) and then includes the expenditures for roads, water supply, and other services in its final: selling price (Rs 50 per square yard in Shah Latif Town, 1981). Market values are five times as high. Similarly, KDA sold Metroville plots in 1976/77 at Rs 60 per square yard, but these could immediatelybe resold at Rs 200 per square yard.

2.60 As discussed under the next heading, only a few of the low-cost plots are allotted to low-income families. Thus, current land policies and procedures result in a large-scalesubsidy to middle- and high-income groups, whereas the low-income people living in katchi abadis suffer under the delays in the slum upgrading program which are due to a lack of government funds.

2.61 Again, the same problem existed at the time of writing the 1974 master plan report which made the following (still valid) statement: "The failure to apply adequate pricing to the sale of plots by KDA is the single factor niostresponsible for the present poor state of infrastructurein the City. It results in large-scaleland speculatioiiand a consequent decrease in the effective supply of land available for housing. It results in a transfer of resources from the public sector to the high-incomegroups in the private sector. It prevents KDA from obtaining sufficient revenues from land -34- developmentto establish a continuous and expanding program for the low-income groups. There is no reason to allow the vast profits from land speculationon KDA plots to continue to accrue to the private sector at the expense of the low-incomehouseholds."

Plot Allocation

2.62 In view of the discrepancy between KDA's selling price and the market value of land, it is not surprising that the demand for plots far exceeds the supply. As an example, there were 240,000 applicationsfor a scheme of 27,000 plots that were recently offered to the public. To process this volume of applicationsin an efficient manner, KDA uses a computer balloting procedure to select the successful applicants. In Hyderabad, HDA has also conducted several computer ballots since 1980.

2.63 Annex 13 presents the wording of a recent KDA advertisementwhich summarizes the basic rules of the ballot. Everybody can apply for a plot, including persons living elsewhere in Pakistan (althoughthey have to file their applicationsat bank branches in Karachi). Only persons already owning a plot or flat are excluded, but this limitation can be circumvented. Applicationsmust be filed at one of 150 bank branches, together with a deposit amounting to 10% of the sale price (which is later refunded to unsuc- cessful applicants). Successful applicants must pay another 40% of the price within 60 days of the ballot, and the remaining 50% within another two years.

2.64 The procedure is simple and probably fair, but puts low-income residents at a disadvantagefor the following reasons:

(a) Written announcements(such as KDA's advertisementfor plots) are more readily understood by educated people than by the usually illiterate poor. The same is true for the filling in of application forms.

(b) The relatively short time within which applicationsmust be filed (less than a month from the publication of the announcement) favors those who quickly hear about the ballot--the literate people who read newspapers.

(d) Even the 10% deposit with the applicationmay be a financial burden to many low-income people. More importantly,as it is common to file several applicationsfor the same ballot (despiteKDA's rule that only one application per person can be filed), persons of sufficientmeans can "invest" in many applicationsand thus raise substantiallytheir odds in this lottery which only knows winners.

2.65 Another problem of the computer balloting procedure, even if it had none of the weaknesses mentioned above, lies in the very randomness of the plot allocation. Whenever a scheme is advertised, persons from all walks of life apply for a plot. When selected,many are reluctant to move to a new -35-

neighborhood with an unfamiliar sOciaLl and ethnic mix. The latter aspect is of particular relevance in Karachi, vhich has experiencedstrong immigration from all parts of Pakistan (as well as India and Bangladesh),and where katchi abadis are often ethnically homogeneous.

Standards of Low Income Plots

2.66 In the last decade, KDA has taken an increasinglyrealistic approach in defining standards which make it possible to develop a great number of building plots within the constraintsof available resources. The size of low-income plots has been reduced from 80 to 60 square yards; in the special case of the Lines Area Redevelopmentscheme, the plots are down to 45 square yards. KDA's new concept of incrementalland developmentis a further promising approach to substantiallyreduce the housing backlog.

2.67 The case may be different in the provincial cities. The minimum size of plots being planned in Sukkur (the only provincial city for which these data are available) is 120 square yards, with an average plot size of 158 square yards for a scheme recently defined by the Municipal Corporation. The production of plots is quite slow, and could probably be substantially improved by a lowering of standardsand by greater involvementof the private sector.

Opportunitiesfor Action

2.68 The concepts behind the katchi abadi regularizationprogram are to be supported. Also, developmentstandards and KDA's capacity to provide plots are probably adequate to drasticallyimprove Karachi's housing situation. However, action should be taken on the followingissues which, so it appears, are at the roots of the continuing housing crisis in Karachi and the secondary cities in Sind.

(a) Above all, a comprehensiveapproach should be developed to solve the housing problem, encompassingboth the upgrading of katchi abadis and land development. This has implicationson financing policies, physical planning, plot allocation procedures,and tax legislation (further discussed below). It also reinforces the previouslymade point that closer coordinationbe achieved between KDA and KMC in Karachi, and possibly HDA and HMC in Hyderabad.

(b) It has proved impossible so far to fully recover katchi abadi upgrading costs from the low-income beneficiaries,and the upgrading program is thereforeprogressing far too slowly. On the other hand, KDA is not permitted to profit from its land developmentactivities and thus has to sell land at prices far below the market value. This benefits those that are lucky enough to win a plot in the lottery. It would be advantageousto change KDA's statutes to permit it to make a profit which could then be used to cross-subsidizethe katchi abadi upgrading program. -36-

(c) The planning of katchi abadi upgrading schemes could be combined with the planning of incremental guided land development,keeping in view the ethnic characteristicsof (Karachi's)settlement pattern.

(d) If KDA were permitted to charge market prices for all (except lowest income) plots, many of the equity problems associated with the plot allocationprocess would disappear. The allocation procedure for the lowest income plots would have to be modified though. Moreover, as low-income plot development is now acceleratingin the secondary cities, a great opportunity exists to devise allocation mechanisms which take account of the lessons learned in Karachi.

(e) Ways should be found to discourage land speculationand to promote the occupation of Karachi's 80,000 to 100,000 serviced plots that are lying vacant. This could take various forms such as: (i) a vacant land tax; (ii) changes in the capital gains tax; (iii) tax incentives for building on and occupying currently vacant land; (iv) legislationto repossess land that has been lying vacant for more than a specifiednumber of years; (v) changes in the landlord tenant regulationsthat would enable owners to let accommodationfor a fixed perod of time at a fair rent with the certainty of being able to repossess the property at the expiration of the lease; and (vi) provision of building loans to construct houses on vacant plots.

(f) The pace of the katchi abadi upgrading program should be stepped up, both in Karachi and in the secondary cities, and a higher degree of cost recovery achieved. One means of accelerating the upgrading program would be through a greater degree of private sector participation.

(g) More serviced plots, at an appropriatestandard, are needed in Hyderabad and particularlyin Sukkur. This implies a strengtheningof the municipal agencies to raise their developmentcapacity.

E. Urban Services

2.69 The scarcity of water is now the most widely felt problem of daily life in the larger cities, and major water supply/sewerageschemes have been or will soon be undertaken in Karachi, Hyderabad, and Sukkur. Waterlogging and drainage are other important issues in some cities near the Indus. In Karachi, public transportand traffic conditionshave steadily deteriorated and, if this trend continues, threaten to become a major problem in this rapidly growing metropolis. -37-

Water Supply

2.70 Karachi's extreme water shortage has led to (and is further aggravatedby) an inequitableand wasteful distributionof water, including the use of in-house storage tanks and suction pumps by the wealthier families. It has been estimated that as much as 50% of water delivered to some households is wasted. On a city-wide basis, about 30% of all water is lost through leakage from the distribution system, even though it is generally under-pressurized. The planned Hub dam and IDA assisted Karachi water supply projects would address this issue by raising the pressure in the pipes and thus reducing the current pollution of drinking water through infiltrationof polluted szater. At the same time, they would also address the leakage and wastage problem through establishment of a leak detection unit and replacement of leaking mains and through a pilot metering program for large consumers, which would form the basis for use related tariffs to stem waste of water.

2.71 The most important contributiontowards improving Karachi'swater supply will be the strengtheningof the newly established KWSB. The IDA assisted project will include institutional and financial strengthening programs as part of an Action Plan to improve KWSB's efficiency and lead to a financially viable institution, a goal to which both the Provincial Govern- ment and KIC are firmly committed. During the second half of the 1980s, the KWSB should be in a sufficientlystrong financial position to start generating surpluses towards its long-term,investment program, the needs of which will be studied by consultants to be employed under the projects. This should help to ensure that the long-term water supply needs of Karachi's growing population are met through timely investment in infrastructure facilities.

2.72 An extensive program to improve water supply in the smaller towns has been underway for some years, but indicationsare that certain new facilities have already been abandoned because of inadequatemaintenance or poor operational procedures. Thus, particular emphasis should be placed on operational support.

Sewerage and Drainage

2.73 Karachi's sewerage system had deterioratedin the 1970s, but has recently improved as a result of large scale investments by KMC. Neverthe- less, the capacity of the two existing sewage treatment plants (40 mgd) remains inadequate to deal with the volume of sewage and investment in new facilities is urgently needed. To ensure that future investment is cost effective, a study of the least cost solution for treatment and disposal of sewage should be undertaken. At the same time, the KWSB will need to find ways and means of making its sewerage operation financiallyviable, preferably through the imposition of a sewerage tax.

2.74 No industrial liquid waste is permitted into Karachi's public sewers, and its unregulated dischargehas been creating a severe pollution problem in some areas. An industrial waste water survey is required as part of the overall sewerage study referred to above, to determine what treatment -38-

facilities are necessary at existing factories, and to prepare proposals for industrial dischargeregulations.

2.75 Hyderabad is encounteringparticular problems of waterlogging,flooding, and overflowingof its sewerage system after heavy rains. To deal with these issues, a Rs 110 million project has been formulated envisaging, inter alia, constructionof 23 km storm water drains and 30 wells to control ground water levels. There are, however, no immediateplans to implement the project because of a lack of funds.

2.76 In the smaller cities, there are signs of inadequate maintenance of recently-builtsewers which have become clogged and are therefore no longer used. Thus, as with water supply, increasedattention should be placed on maintenanceand operationswhen new sanitation schemes are developed.

Traffic and Transportationin Karachi

2.77 As Karachi expands, the mobility needs of its residents become dis- proportionatelybigger and more complex. The vast majority of the population depend on buses to travel within the urban area. However, the supply and quality of bus services are inadequate,and this is further aggravated by spreading traffic congestion caused by the rapid increase in car ownership. If current growth rates continue, by the early 1990's there will be 500,000 cars in Karachi (which would then have a population of more than 10 million), up from 33,000 cars in 1975. It is thus high time to: (a) streamline traffic and transport planning responsibilities;(b) develop a comprehensiveapproach to traffic management, including bus priorities,parking, traffic safety, and capacity improvementsat intersections;(c) improve public transport services; and (d) define a long-term transport strategy that can cope with the growth of Karachi, its population,and the vehicles using its streets.

2.78 Various federal, provincial,and local agencies are involved in the shaping of Karachi's transport. Until recently, the two principal mass transport undertakings,KTC and the railways, were federally controlled and subsidized. Responsibilityfor KTC was transferredto the Provincial Govern- ment in November 1982, together with its losses, although Federal Government will continue to provide a subsidy up to the end of FY83. At the provincial level, the Regional Transport Authority (RTA) issues route permits and fixes fares for private buses, minibuses, taxis, and motor rickshaws. Other provincial agencies involved in traffic management and planning include the traffic police, and most notably, KDA.

2.79 KDA has been leading in the constructionof new roads, usually in connection with development schemes on the city's outskirts. Moreover, its Master Plan and Environmental Control Department has been the only entity engaged in long-term transportation planning, within the framework of the 1974 Karachi Master Plan. In early 1981, a new Traffic Engineering Bureau was set up in KDA, which is focusing on traffic safety, traffic engineering improvements,and surveys. At the same time, however, KIC has retained its traffic engineeringresponsibilities which overlap with those of KDA. For example two different traffic improvementsare being considered independently by KDA and KMC for the same major thoroughfare. Apart from this, KMC is responsiblefor the maintenanceof roads, including those in mature developments built by KDA, all municipal maintenancefunctions having been transferred to KMC.

2.80 The dispersionof responsibilitiesin the traffic and transport sector is now generally regarded as a major problem, especiallyin view of the worsening traffic and public transport conditions. A recently created Transport Commissioncompleted a report in late-1982which is not yet available, but which is expected to address: (a) the current public transport shortage; (b) traffic safety; and (c) institutionalresponsibilities. With regard to the last item, the Commission is likely to comment on a previous proposal to create a MetropolitanTransport Authority,who would be responsible for all traffic and transport :issuesin the urban area.

2.81 This should also lead towards a more comprehensiveapproach to traffic management,which is becoming increasinglyurgent. The street network, most of which was built several decades ago, is excellent and consists of many wide and well spaced avenues, on which traffic generally flows well. However, with the rising number of private cars (doublingevery three years), the spare capacity of the streets is rapidly being used up. Severe traffic congestionis now common in large parts of the central area, which is not only due to high traffic flows, but also to widespread parking along the curbs. There are practicallyno off--streetcar parks in the center.

2.82 There is scope to increase network capacity by traffic engineering techniquesand, particularly,by establishinga parking policy for the central area. Desirably, the additionalstreet capacity made available through such measures should then be reserved for public transport,as was done in 1981 with the introductionof two segregatedbus lanes. Plans are also being consideredfor the installationof more traffic signals, and for improving their maintenance. At present, only 53 intersectionsare signal- ized (the much smaller city of Lahore has over 80), but only half of the signals are functioning.

2.83 The number of fatal traffic aLccidentshas risen in the last nine years, from 300 in 1972 to 585 in 1981. This was largely due to the increase in motor vehicles. If related to the number of vehicles on the road, accident deaths have actually declined. However, the probability of a Karachi resident being killed in a traffic accident has risen considerably,and future traffic management efforts should give increased emphasis to the improvementof traffic safety.

2.84 The principal bus company, KTC, was created in 1977 as a 2/3 feder- rally, 1/3 provincially-ownedGovernment Corporation, taking over some assets of the Sind Road Transport Corporationwhich was given the responsibilityof serving the Province's interior. KTC's services (in terms of bus-kilometers) have grown steadily at an average rate of 33% per year, is staff by 7% per year, and also its deficit by 21% per year, to Rs 50 million in FY1980/81. Its ratio of expendituresto revenues, however, has improved substantially from around 3 in 1978/79 to 1.66 in 1980/81. KTC's financial conditionsare expected to improve further, in view of the Government policy to minimize the need for subsidiesand a fare increase now being considered. -40-

2.85 Such a fare increase would also strengthen private bus operations, which have been stagnating in recent years because of poor economic return, and would thereby contribute to overcoming the current shortage of public transport services. Although the Government has been followinga non-restrictive licensing policy, private buses have been expanding at an average annual rate of only 2% since 1978, compared to 14% in 1975-78. (Private buses are mostly owned by individuals or very small companies, and commercial banks do not generally give bus loans.) However, it is estimated that private buses still account for about 70% of bus passenger journeys in Karachi.

III. URBAN DEVELOPM1ENTSTRATEGY - PROGRAMSAND PROSPECTS

A. Strategy and Objectives for Future Programs

Regional Development

3.01 There is a case for deflecting some of Karachi's growth to the secondary cities, as long as this does not become counterproductive for the overall economy. In practice, this would mean (a) removing or reducing government subsidies to Karachi which are inherent in investment and pricing policies, and (b) promoting growth in smaller cities by policy measures and investments, some of which could address urban infrastructure needs. To achieve this, it appears most promising to concentrate government efforts on a few secondary cities with economic take-off potential rather than spreading them thinly among a lage number of towns. At this stage, the regional centers of Hyderabad and Sukkur seem the most likely candidates (paras 2.13-2.18). RPO's regional planning exercise may, when completed, identify some additional cities that would have particular potential for becoming growth poles.

3.02 However, measures to improve urban infrastructure services alone are unlikely to stimulate substantial growth. Programs which support employment generation are, therefore, at least as important as providing infrastructure. The most promising investments are those which would support small and medium-scale manufacturing and agro-processing. This would include improvements in power supply, strengthening of linkages between Hyderabad/Sukkur and their hinterlands, and better telecommunications with Karachi. An important aspect of any regional development program is that national and provincial policies should be coordinated to achieve a consistent package of location incentives.

Pricing and Urban Finance

3.03 The reduction of subsidies to the urban sector, primarily Karachi, and a greater degree of cost recovery for urban services is essential if urban areas are to become more self-sufficient. It can also be seen as part of ProNi ciaal GoNernment's policy of deconcentration. The key areas to work on are operational efficiency and cost recovery in the water supply and sewerage sector and reassessment of the property tax. The former would be addressed in the IDA assisted Karachi water supply project, and the latter could be reviewed in conjunction with a Sind urban project, which might -41-

include componentsaimed at improving resource mobilization in Karachi and making more efficientuse of existing municipal services.

Urban Land and Shelter

3.04 The provision of land, infrastructureand shelter needs to be planned and implemented on a more coordinated basis than previously. This calls for a coordinated land development strategy and will require closer cooperation between developmentauthorities such as KDA and HDA and municipal authorities such as KMC and HMC and also between Provincial Government and the municipal authoritiesof secondary cities. The objective should be to achieve a higher degree of cost recovery for area development schemes so that sufficient funds can be generated to provide a cross-subsidyfor Katchi Abadi upgrading schemes and also to provide for the operation and maintenance expenses of the municipalities.

3.05 While improved coordinationof the urban shelter program should enable it to better meet the needs of the urban poor, there is also a need to expand the program significantly in the secondary cities, where so far only limited programs have been initiated. In Karachi the program is already being implementedon a large scale, but thousands of plots remain unoccupied. Improvementin the plot allocation process coupled with better land use and location policies that respond to the demand of low-income groups should result in a higher proportion of plot occupancy.

3.06 An important objective of future programs should be the mobilization of local resources. In addition to improved cost recovery and tax assessment, this also calls for mobilization of personal savings to finance a large part of shelter schemes. The remittances of overseas workers already play an important role in real estate development,but they could probably be much more effectivelyused if channelled through some form of savings and loan institution.

Urban Services

3.07 Improvements in water supply are of crucial importance in all the cities of Sind. The Hub dam scheme and the World Bank assisted project should bring some relief to Karachi, while Provincial Government is making substantial investments to improve supplies in secondary cities. A prime objectivemust be to stop the drain on local authority and Provincial finances caused by these services, by improving operationalefficiency and achieving better cost recovery. Sewerage, drainage and solid waste management are also priority areas in most cities, although the level of service to be provided will depend upon the ability of the beneficiariesto pay and it is quite probable that relatively modest:systems involving low cost technologies would be appropriate in most secondary cities.

3.08 In the urban transport sector, Karachi's spreading traffic congestion needs urgent attention in the form of developinga longer term transport strategy and taking action to deal with immediate problems. A key element would be to reorganize the fragmented institutionalarrangements for regulating traffic and planning and implementingtraffic schemes. Private operators -42- of public transport need to be encouraged to improve their services by creating incentives through the fare structure and route licensing regulations.

InstitutionalFramework

3.09 Strengtheningthe institutionalframework will be a key objective of future programs. The multiplicity of agencies operating in Karachi points to the need for reorganizationif the city's resource base is to be effectively utilized. The report of the Sub-Committeeon Effective City Administration provides a useful starting point for institutional reform. One of the most urgent issues to be addressed is the preparation of a medium-term development program for the metropolitanarea in which the capital and operating budgets of the different agencies would be coordinatedand which would be comple- mented by a strategic physical plan for the overall area. Mechanisms need to be establishedto make it possible to update such a program on a regular basis if it is to be effective. This would require at least closer coordination between the various agencies involved and probably a more formal linking of their functions.

3.10 In the rest of Sind institutionalstrengthening needs to focus on the planning and budgeting capabilitiesof the secondary cities. Here, shortage of qualified staff is a critical problem which needs to be addressed through appropriate training schemes and more effective use of existing human resources.

B. ImmediateAction Plan

3,11 As already indicated, the main areas on which initial projects might focus would be policy, institutionaland financial issues. Physical components might initially be small, but should be considered as part of a longer term program. The physical components should also be simple, to ensure their effective implementation,particularly in secondary cities. Studies and technical assistance programs should be included to address policy and institutionalissues and to prepare the way for an expanded and replicable urban program.

3.12 An immediate action program, in which the Bank and other donors might assist, should address these issues and might include the followingcom- ponents:

(a) Institutional and financial strengthening programs for Karachi and secondary cities, particularly resource mobilization,cost recovery and training;

(b) Strategicdevelopment programs for secondary cities;

(d) Technical managementof municipal services, particularly solid waste management and infrastructureprovision and maintenance in Karachi and other cities;

(f) Study of the least cost solutions for sewage treatment and disposal in Karachi, including review of low cost sanitation systems in new developments. ANNEX 1 Page 1

HISTORICAL ABSTRACT OF SIND

Sind means the country of the Indus (Sindu) derived from the Sanskrit word "Sindu" meaning river. Historically, Sind has been a thinly populated region based on agricultural development. Its agriculture has been sustained by rich alluvial soils watered by the river's natural flow and by a large artificial irrigation system. The early Indus civilization was located there as far back as 5000 B.C. Remains of a relatively sophisticated civilization have been discovered at various locations, but particularly at the archaeological site of Moen-jo-Daro in Larkana District. In different periods of history many cities have prospered and declined on the banks of the Indus, such as Brahmanabad, Alore, Mansoora, Sehwan, Nasarpur, Debal, Umerkot and Thatta. A major change occurred in 712 A.D. when the Arabs annexed the province. This was the beginning of extensive trade with the rest of the Moslem Empire, when Thatta emerged as a major port trading with Arabia, Persia, China and the rest of the Indian sub-continent. The towns of Sind developed over the next thousand years a substantial industrial base with activities such as textiles (cotton, wool, silk), carpets, leather, saltpetre, indigo, dairy products and fisheries. However, after the mid-eighteenth century there was a period of economic stagnation closely associated with the effects of civil wars and the British invasion.

Although the British neglected the old towns 1/ and altered Sind's economic base by making the area predominantly a supplier of raw materials to British industries, British rule had a major impact on the settlement pattern. The British built well laid-out new towns (cantonments) in Hyderabad and later in Karachi and other cities. They established Karachi, and sub- sequently moved the capital there. At the time of its conquest by Sir Char- les Napier in 1843, Karachi (Kalachi or Krokola) was a small.fishing village of about 14,000 people. However, it soon prospered because the British developed it as the major port for exporting the products of the Punjab. The Municipal Corporation was established in 1852 and the Karachi Port Trust was founded in 1886. The British also changed the administrative framework of the province, replacing the traditional territorial and communal units ("Panchaits") with a district-level of administration primarily organized for revenue collection and service delivery. Public works projects were implemented providing the province with a network of railways, roads and bridges. At the beginning of the twentieth century, Improvement Trusts were established to undertake urban development functions. Agro-processing activities were stimulated in district headquarters and in medium-sized towns such as Hyderabad, Shahdadpur and Tando Adam.

1/ Many of the older urban settlements on the banks of the river disappeared because of changes in the river's flow. --45- ANNEX 1 Page 2

The most important single developmentfrom the viewpoint of its impact on the settlement pattern was the Sukkur Barrage, completed in 1932. The constructionof four canals on the left bank and three on the right affected three-quartersof the land area of the province, assured a water supply for settled agricultureand spurred the growth of small towns. The rise of these towns was associatedwith the emergence of a trading middle class which diluted the traditionalpower of the feudal landlords. Virtually no new towns were added after 1947 (althoughsome villages graduated into towns). Hence, the current urban pattern of Sind is primarily the result of actions taken during the period of British rule. The British also prepared plans f'or other barrages at Kotri and Guddu, though work on the former did not begin until after Independence.

Historically,Sind has functionedmuch as an independent,isolated province since its location was distant from the main axes of communication in India. However, it did not become a separate province until 1935. Until then, it was part of the Bombay Regency. This meant that it had somewhat closer links with the Bombay region than with the other provinces that are now part of Pakistan. Even provincial status had relatively little impact since soon after Independenceall the existing provincesof Pakistan were merged into the single province of West Pakistan with its provincial capital in Lahore. Only in 1970 did Sind resume its provincial status.

Nevertheless,Independence was a major breakthroughin the economic developmentof Sind with massive implicationsfor its settlement pattern. Although Karachi had thrived during World War II as an important air base, its growth acceleratedafter Independencefor two principal reasons. First, it became the new nation's only seaport. Second, it was the major destination of Moslem refugees from India. As a result, its population rose from 436,000 in 1947 to 1,150,000 in 1951. Moreover, the post-Independence developmentstrategy strongly emphasized industrializationbased on import substitution,and this reinforced the growth of Karachi, partly because it was the most attractive location for such industries,partly because the neglect of agricultureresulted in high rates of rural-metropolitan migration.

Thus, Sind province developed a strongly primate urbanizationpattern which was not moderated until the 1960s when the "green revolution"stimulated higher agriculturalproduction and improved yields and hence helped the villages and smaller towns to grow. As a result, towns in the size class range of 10,000-25,000grew the fastest of all urban size classes between 1961 and 1972. Nevertheless,this did little to moderate the growth of Karachi, particularlysince most of the non-Bengali refugees from an independent Bangladesh came to the Karachi area.

Sind therefore remains a province of sharp contrasts between the cosmopolitanindustrial and commercial capital of Karachi, on the one hand, and the rest of the province, still heavily dependent on subsistenceagriculture, on the other. Only Hyderabad and Sukkur have developedas sizeable -46- ANNEX 1 Page 3 commercial centers. The other district headquartersperform the same functions as in the colonial era, namely as tax-collectionstations and as suppliers of basic services such as health and education. Most of the other towns in Sind are located on or near the national highway and/or the railway line and function primarily as agriculturalmarketing and service centers. -47- ANNEX 2 Page 1

URBAN POPULATION GROWTH IN SIND AND THE NATION

It is incomplete to analyze urban population growth in Sind in isola- tion from the rest of Pakistan since the influence areas of some of the cities extend beyond the provincial boundaries. Moreover, Sind only provides part of the national urban system; its urban population is less than two-thirds that of Punjab, or less than 35 percent of national urban population.

Table 2.1 displays the growth of urban population by province since 1951. The two largest provinces, Punjab and Sind, account for almost 90 percent of Pakistan's urban population. Since 1951, Sind has been catching up on Punjab in terms of urban population, for in 1951 there were less than one-half the number of urban residents in Sind compared with Punjab. However, whereas the rate of urban population growth in Sind was much higher than in Punjab between 1951 and 1972, the gap in growth rates has been virtually ieliminatedsince 1972. This is largely due to the fact that the growth rate of Karachi, which has been the main force fuelling urban population growth in Sind has declined in the last intercensal period towards the national urban average.

At first sight, the urban/total population share data of Table 2.2 suggests that Sind is by far the most urbanized province in Pakistan with an urbanization level more than 50 percent: higher (at 43.4 percent) than the national average whereas the degree of urbanization in Punjab was almost the same as the national average. Both Baluchistan and NWFP, on the other hand, are significantly less urbanized with urban population shares at about 15 percent. Moreover, the gap in urbanization shares between Sind and Pakistan has widened since 1951. Once again, the underlying explanation of this trend is the growth of Karachi. As the last column of Table 2.2 suggests, if the provincial primate cities of both Sind and Punjab are excluded, the urbanization level of Sind is more than halved and, as a result, the rest of Sind is less urbanized than the rest of the Punjab (i.e. excluding Lahore). This very mocderate degree of urbanization in Sind, once Karachi is omitted, must be kept in mind in discussions of an appropriate urban development strategy for the province. Once the national urban center of Karachi is left on one side, SiLnd province is far from urban.

This argument is supported by the urban size class data of Table 2.3. Whereas Sind has only 24 cities larger than 25,000 population, Punjab has 80 and even the less developed NWFP has 14 such cities. Moreover, Sind has only 6 cities above 100,000 population while Punjab has 19. Thus, Punjab has a much more fully developed urban system (or subsystem) than Sind. Both the national urban hierarchy of Pakistan as a whole and the regional urban hierarchy of Punjab are quite regular while that of Sind is highly skewed. -48-

ANNEX 2 Page 2

Unless Pakistan develops a very comprehensive national urban policy for promoting all levels of the urban hierarchy, 1/ the rates of growth of the large cities, say those larger than 100,000, 2/ are likely to play the major role in moderating the growth of Karachi. This hypothesis reflects the argument that the generation of urban agglomeration economies is critical to attempts to disperse both population and economic activity out of the primate city. 3/ However, with the exception of Larkana which benefited from politi- cal favors in the early 1970s, the 100,000-plus cities in Sind grew more slowly than those in the rest of Pakistan in the period 1972-81 (Table 2.4). Some of the higher growth rates (e.g. Peshawar, Quetta) are misleading because of the recent influx of refugees from Afghanistan, while Islamabad is surely a special case. Nevertheless, there are strong performers in Punjab such as Gujranwala and, among middle-sized cities, Kasur, Gujrat, Okara, Sheikhupura, Rahimyar Khan, Chiniot and Jhelum. The concentration of vigorous large cities outside Sind are factors to be considered in the development of an internal urban development strategy designed to redistribute population from Karachi, as there is a possibility that attempts to control the growth of Karachi would not benefit the towns of Sind but would help to promote the growth of cities elsewhere in Pakistan.

1/ The Federal government has recently commissioned a National Human Settle- ments Policy Study to provide inputs for the formulation of a national human settlements policy.

2/ As Table 2.4 shows, the cities in the 100,000-500,000 size class grew somewhat faster than the 500,000-plus cities between 1972 and 1981.

3/ Dispersion is much more likely to take the form of changes in the location of increments of growth (i.e. changes in the direction of rural-urban migration and in the locations of new firms) than direct relocation out of Karachi into other cities. -49-

Table 2.1: URBANPOPULATION BY PROVINCE, 1951-81

('000)

% Change

Province 1951 1961 1972 1981 1951-61 1961-72 1972-81

Sind 1,771 3,171 5,700 8,205 79.1 79.8 43.9

Punjab 3,597 5,476 9,180 12,998 52.2 67.6 41.6

NWFP 507 742 1,189 1,652 46.4 60.2 38.9

Baluchistan 122 223 398 670 82.8 78.4 68.3

Federal Terri- - - 77 201 - - 161.0 tory of IslamAbad

Pakistan 5,997 9,612 16,544 23,726 60.2 72.1 43.4

Source: Censuses of Pakistan Table 2.2: PROVINCIAL URBAN/TOTAL POPULATION SHARES, 195181

Province 1951 1961 1972 1981 1981

Sind 28.86 37.84 40.69 43.37 21.10 (excluding Karachi) Punjab 17.42 21.41 24.53 27.53 22.74 (excluding Lahore) NWFP 15.17 13,24 14.26 15.23

Baluchistan 11.38 16.88 16.53 15.61

Pakistan 17.82 22.52 25.48 28.28

Source; Population Censuses, 1951, 1961, 1972 and 1981 -.51-

Table 2.3: NUMBER OF CITIES OVER 25,000 BY SIZE CLASS AND PROVINCE,1981

Size Class Punjab Sind NWFP Baluchistan Pakistan

More than 1 million 2 1 0 0 3

500,000 - 1 million 3 1 1 0 5

100,000- 499,999 14 4 1 1 20

50,000 - 99,999 22 4 6 0 32

25,000 - 49,999 39 14 6 3 62

TOTAL 80 24 14 4 122

Source: PopulationCensus 1981 -52-

Table 2.4: LARGE CITIES IN PAKISTAN

City Populatn( % Change 1972-81 1961 1972 1981

Punj ab

Lahore 1,296 2,165 2,992 35.0 Faisalabad 425 822 1,092 32.8 Rawalpindi 340 615 806 31.1 Multan 358 542 730 34.7 Gujranwala 196 361 654 81.1 Sialkot 164 204 296 45.1 Sargodha 129 201. 294 46.2 Jhang 95 136 195 43.4 Bahawaipur 84 134 178 32.8 Kasur 75 103 155 50.5 Gujrat 60 101 154 52.5 Okara 102 154 51.0 Sahiwal 75 106 152 43.4 Sheikhupura 82 141 72.0 Wah - 122 Rahimyar Khan 74 119 60.8 Chiniot 69 106 53.6 Jhelum 70 106 51.4 D. G. Khan 71 103 45.1

-Sind

Karachi 1,913 3,515 5,103 45.2 Hyderabad 435 601 745 24.0 Sukkur 103 159 193 21.4 Mirpurkhas 82 124 51.2 Larkana 72 123 70.8 Nawabshah 81 102 25.9

NWFP

Peshawar 219 259 555 114.3 Mardan 78 115 148 28.7

Baluchistan

Quetta 107 156 285 82.7

Islamabad 77 201 161.0

Pakistan Cities More than 500,000 42.0 100,000- 500,000 51.7

Source: Population Census, 1972 and 1981 -53. ANNEX 3 Page 1

URBAN DEVELOPMENTIN SIND

The urban system of Sind is highly skewed with only two cities above the 500,000 mark, Karachi (5.1 million) and Hyderabad (745,000). Most of the urban centers are within the 5,000 (the urban threshold in Pakistan) to 25,000 range, and there has been a proliferationof such centers over the last twenty years as the urban size distributiondata of Table 3.1 suggest. Although a few of these urban areas are new settlementsdeveloping spon- taneously,for example as transportationnodes, most of them are simply graduates from the category of villages. However, even though their number has increased from 54 to 95 towns in the last two decades, their contribution to urban growth in Sind remains relatively small with a total population of less than one million, or about 12 percent of the urban population of Sind. The number of towns in the 25,000-100,000size class, a critical size from the viewpoint of an intermediatecities strategy,has also increased, from 7 centers in 1961 to 18 centers in 1981, but again their contributionto urban development is currently rather modest with a combined population of about 760,000, or about 9 percent of Sind's urban population. Furthermore,the cities with more than 100,000 inhabitantshave performed weakly, with the exceptions of the special case of Larkana and a slightly above the national urban average performanceby Mirpurkhas. Since Hyderabad was growing very slowly, Karachi continues to dominate the provincial urban hierarchy in spite of the fact that it has grown over the last decade barely faster than either the provincialor the national urban average.

This almost consistentlyspotty growth performanceof the urban sector in Sind is a little surprising in view of the fact that Sind's total population has grown significantlyfaster than the national average, at 3.5 percent per annum compared with 3.0 percent. The growth rate of urban population was not very much higher than the provincial aggregate population growth rate, growing at about 4.3 percent, a marked decelerationcompared with the previous intercensalperiod (5.2 percent per annum, 1961-72). This implies that the urban-ruralgrowth gap was quite narrow in Sind in the 1970s. In fact, the rural population expanded by 30 percent between 1972 and 1981, reaching almost 10.8 million in the latter year. Thus, the modest growth rate of urban population is much less an indictment of the urban sector than a tribute to the capacity of the rural sector to absorb much of its expanding potential labor force.

Table 3.2 displays the 1972 and 1981 population of the metropolitan and municipal corporations,all the municipal committee towns, and the town -54-

ANNEX 3 Page 2

committees with populationsover 20,000. The data show that very few of the first two categories grew faster than the provincial urban average. 1/ Karachi grew a little faster, as did several of the smaller Municipal Commit- tee centers such as Kandhkot, Ghotki, Sanghar and Ratodero. But only Larkana and Mirpurkhas among the 50,000-plus cities grew faster than the provincial urban average. Shahdadpur grew rapidly, but it had only 42,000 people even in 1981. Most of the towns even failed to grow as fast as the provincial population as a whole. The fast-growerswere the larger Town Committees, but only Dharki and Moro have attained a populationof 30,000 or more. Although the growth rates of these Town Committee centers are impressive,they remain below the threshold size for generating agglomerationeconomies that might attract new economic activities on any appreciablescale.

The absence of thriving intermediatecities in Sind places much of the burden of an intraprovincialdispersal strategy on the larger cities, even if they have failed to grow rapidly in the recent past. Table 3.3 places the growth of Sind-s eight largest cities in a long-run historical perspective. Only Karachi and Hyderabad were larger than 50,000 in 1901. Since that time, most cities have experienced chequered histories. Karachi did not begin to boom until the 1940s, especially after Independence. Hyderabad has grown slowly throughout with the notable exception of the decade or so after Independencewhen its population was boosted by an influx of refugees. Sukkur and Shikarpur have never benefited from boom periods while Larkana's growth was also sluggish before the 1970s. Nawabshah and Jacobabad fared somewhat better, perhaps because of their strong rural hinterlands. Mirpurkhas has grown quite rapidly since 1921, with the exception of the 1960s when its growth rate fell far below the provincial urban average. None of the larger cities have been consistent enough in their growth performanceto instill confidence in their capacity to attract substantial numbers of rural migrants otherwise destined for Karachi. There is little ground for anticipatingsuch redistributionof urban population shares within Sind without a dramatic reversal in the trends of the past. Any attempts by provincial policy-makersto promote iuch a redistributionshould be very modest in their expectationsof what might reasonably be achieved.

1/ The provincial urban population total for 1981 is somewhat underes- timated, because it excludes villages with urban characteristicsand populationsover 5,000 (e.g. Halani, Mirwah and Buhara) that have not been declared Town Committees. Table 3.1: SIZE DISTRIBUTION OF URBAN SETTLEMENTSIN SIND, 1961, 1972 AND 1981

No.of towns Population in Size Class (C' 000)

Size Class 1961 1972 1981 1961 1972 1981

More than 1,000,000 1 1 1 1,065 3,515 5,103

500,000 - 999,999 - 1 1 - 601 745

100,000 - 499,999 2 1 4 531 159 542

50,000 - 99,999 2 5 4 115 363 292

25,000 - 49,999 5 8 14 194 279 469

I-n, 10,000 - 24,999 14 26 44 208 396 655

5,000 9,999 40 58 51 202 386 335

Total 64 100 119 2,315 5,699 8,141

Source: Population Censuses, 1961, 1972 and 1981 -56-

Table 3.2: POPULATIONSOF MUNICIPAL COMITTEES AND

CORPORATIONSIN SIND, 1972 AND 1981

Population('000) Corporations 1972 1981 Growth Rate (%)

Karachi 3,515.0 5,103.0 4.50 Hyderabad 600.8 744.9 2.60 Sukkur 158.8 193.0 2.33

MunicipalCommittees

Mirpurkhas 82.0 124.0 5.01 Larkana 71.9 123.4 6.60 Nawabshah 81.0 102.2 2.78 Shikarpur 70.9 87.6 2.53 Jacobabad 57.6 80.1 4.00 Tando Adam 49.7 63.1 2.84 Khairpur 48.3 61.6 3.00 Shahdadpur 22.0 42.0 7.95 T. M. Khan 39.0 41.6 0.80 Dadu 30.2 39.0 3.10 Kotri 29.7 37.9 2.90 Shahdadkot 24.3 32.8 3.60 Kandhkot 21.9 32.1 4.59 Thatta 19.0 32.0 6.34 Rohri 26.8 32.0 2.10 T. Allahyar 26.3 31.3 2.10 Ghotki 19.3 29.0 4.96 Sanghar 19.7 29.0 4.65 Kamber 18.5 25.0 3.64 Badin 21.9 22.9 0.52 Ratodero 13.3 19.7 4.74 Naudero 7.0 14.0 8.56

Town Committees(with more than 20?000 inhabitants)

Dharki 7.1 35.0 20.73 Moro 19.1 30.0 5.46 Hala - 23.5 - Matli 7.1 23.4 15.15 Thari Mirwah - 22.6 - Hingorja - 21.1 - MirpurMathelo 13.5 21.0 5.35

Sind urban population 5,700.0 8,205.0 4.40

Source: Census of Pakistan 1981, Census Bulletin4 (December1981) Table 3.3,: ANUAL GROWTH RATES OF MAJOR CITIES IN SIND, 1o01-81

1901 City Population 1901-11 1911-21 1921-31 1931-41 1941-51 1951-61 1961-72 1972-81

Karachi 136,300 3.20 2.72 2.11 3.78 9.38 6.00 6.28 4.50

Hyderabad 69,400 0.91 0.75 2.20 2.85 6.03 6.04 3.19 2.60

Sukkur 31,300 1.20 1.45 4.78 0.23 1.49 2.97 3.73 2.33

Shikarpur 49,500 0.87 0.19 1.20 0.12 3.20 1.75 2.37 2.53

Mirpurkhas 2,800 5.71 1.77 5.81 6.77 7.51 4.18 2.57 5.01

Nawabohah (started) - - 9.74 9.57 6.93 2.93 5.01 2.78 (in 1912)

Larkana 14,500 1.00 0.99 3.37 1.29 1.70 3.74 3.50 6.60

Jacobabad 7,700 0.81 2.43 4.06 3.21 0.56 4.45 4.26 4.00

Source: Population Censuses -58- ANNEX 4 Page 1

INTER-DISTRICTPOPULATION GROWTH

Another way of looking at the pattern of populationchange over Sind province is to treat it in terms of intraregionalvariations rather than in terms of urban growth. Table 4.1 shows the population change between 1972 and 1981 for each of the thirteen districts. None of the districts grew faster than Karachi, and only two grew significantlyfaster than the provincial average, namely Tharparkar (4.72 percent per annum) and Jacobabad (4.31 percent per annum). Several districts grew much more slowly than the provincial average of 3.52 percent per annum, particularlyThatta (1.35 percent), Shikarpur (1.47 percent), and Nawabshah (2.27 percent). The projections for the year 2000 in Table 4.1 should be consideredwith caution. They merely give an idea of the provincial distributionof population if the growth rates of the recent past were to remain stable. On this assumption the provincial population would almost double over the next two decades, and Karachi district would reach a total of 13 million people, or 35.5 percent of the total provincial population.

A more useful long-term perspectivemay be given not by looking into the future but by examining the past. Table 4.2 presents the annual growth rates for each district in each decade of this century. In 1901, Karachi district was the smallest district in terms of population,and Hyderabad and Sukkur districts were dominant. Larkana and Nawabshah districts were also important. Since then, however, the provincial distributionof population has been transformedby inter-districtdifferentials in population growth rates. However, the province's aggregate population growth rate did not begin to accelerate rapidly until Independence. In the early decades of the century, population growth was sluggish (in fact, it was negative in the 1911-21 decade), and several districts either stagnated or lost population. Even in the 1940s when Karachi grew at an average annual rate of over 10 percent (with most of the growth occurring after 1947), three districts (Tharparkar,Nawabshah and Larkana) actually lost population, possibly the result of the post-Independencereshuffle of population between India and Pakistan.

The rate of population growth in Sind has not remained stable over the past three decades, although it as consistentlyhigher than the pre-Independencerate. It rose in the 1960s to 4.57 percent per annum from 3.15 percent in the 1950s and then declined again the 1970s to 3.52 percent. The instabilitywas even more marked at the district level. Both Jacobabad and Sukkur stagnated in the 1950s but then grew at around the provincial average in the 196 0s and 1970s. The other northern district of Khairpur, on the other hand, deceleratedin the 1960s, a reflection of the economic stagnation of its industrialbase. Karachi was the only district that grew consistentlyfaster than the provincialaverage, obviously because the district was the main beneficiary of the strong urbanizationforces. The growth of both Tharparkarand Dadu accelerated in the 1960s and 1970s above their low historicalrates. Finally several districts that grew around or above -59- ANNEX4 Page 2 the provincial average in the 1960s decelerated in the 1970s, such as Nawab- shah, Hyderabad and Thatta.

Unfortunately, the migration data from the 1981 Census have not yet been published. The net migration by district data from the 1972 Census are given in Table 4.3. These show that three districts (Karachi, Nawabshah and Hyderabad) accounted for seven-eighths of the total net migration of Sind in 1972. Thatta also absorbed a substantial number of net migrants relative to its small population size. On the other hand, both Jacobabad and Tharparkar were net emigrant districts. A comparison of the growth rates of 1961-72 and 1972-81 suggests that these net migration trends have not persisted through to 1981. The next three beneficiaries after Karachi of net migrants in 1972 were Nawabshah, Hyderabad and Thatta, all of which grew faster than Sind as a whole in the period 1961-72, but which are now among the slowest-growing districts. Conversely, the net labor exporters of the 1960s (Jacobabad and Tharparkar) are now the fastest-growing districts behind Karachi. This finding tends to confirm the previous observation that the fortunes of individual districts have fluctuated wildly over time. The only consistent trend is the continued strength of Karachi district.

Changes in the level of urbanization by district between 1961 and 1981 are shown in Table 4.4. In a few districts (e.g. Dadu, Jacobabad, Nawabshah) urbanization over these two decades was very modest, and in Jacobabad and Nawabshah as well as in a few other cases (e.g. Tharparkar, Thatta), there was barely any change at all in the 19 70s. In general, Karachi has been the major force in the urbanization of the province. However, in four districts (Khairpur, Sukkur, Larkana and Hyderabad) there was a marked rise in the degree of urbanization in the 1970s. Significantly, two of these districts (Larkana and Hyderabad) grew rather slowly over this period, while the other two grew at a rate very close to the provincial average. Conversely, the fastest-growing districts (Tharparkar and Jacobabad) experienced negligible increase in the urbanization level in the l970s. The negative relationship between the rate of population growth and changes in the level of urbanization an be explained in the following way. Slow-growing districts experienced high rates of rural-urban migration to urban areas both inside and outside the district, so that a high rate of urban growth is one of the symptoms of a failure of the rural areas to absorb their indigenous labor force. Conversely, districts with high rates of population growth had high retention rates in the rural areas; hence, they had both low net outmigration rates and low local rates of urbanization. However, in those districts where urbanization increased rapidly, it was not necessarily the district headquarters that grew most rapidly. The only examples of the district headquarters growing much faster than the district average in the 1970s were Larkana and Thatta (the slowest growing district). This may be a symptom of a more dispersed urbanization pattern with smaller towns growing faster than the district headquarters.

To sum up, there are marked variations in district rates of population growth both over space and through time. This suggests that these rates are quite sensitive to changes in local economic conditions. The fact that a -60- ANNEX 4 Page 3 district may grow slowly in one decade but grow rapidly in the next provides grounds for cautious optimism that policymakersmight be able to influence how fast a particulararea grows. However, it is not enough that rates of population growth are sensitive to changes in local economic conditions. It is also necessary to demonstratethat policymakershave the instruments,the resources and the will to bring about changes in these economic conditions. -61-

Table 4.1: POPULATIONBY DISTRICT,1972, 1981 AND (PROJECTED)2000

Population ('000)

Growth Rate District 1972 1981 2000 (Projected) 1972-81 (%)

Jacobabad 709 1,013 2,258 4.31

Sukkur 838 1,120 2,149 3.49

Shikarpur 547 619 722 1.47

Larkanr 922 1,140 1,836 2.54

Nawabshah 1,354 1,637 2,507 2.27

Khairpur 725 981 1,935 3.64

Dadu 806 1,074 2,046 3.45

Hyderabad 1,659 2,080 3,457 2.71

Badin 604 769 1,321 2.89

Saughar 693 922 1,750 3.43

Tharparkar 1,016 1,501 3,605 4.72

Thatta 676 757 977 1.35

Karachi 3,607 5.353 12.998 4.78

Sind 14,156 18,966 37,561 3.52

Source: PopulationCensus 1981 Table 4.2: DISTRICT GROWTH RATES, 1901-81

1901 Pop. 1981 Pop. District ('000) 1901-11 1911-21 1921-31 1931-41 1941-51 1951-61 1961-72 1972-81 ('000

Jacobabad 207 1.26 -0.89 1.95 1.59 3.42 0.03 4.4 4.31 1,013

Sukkur 523 0.93 -1,18 2.03 1.05 0,57 0.99 4.7 3.49 1,120

Shikarpur ------1.47 619

Larkana 425 0.07 -1.01 1.50 1.31 -0.18 1.88 3.7 2.54 1,140

Nawabahah 398 1.20 -0.69 1.72 1.64 -1.76 3.50 5.9 2.27 1;637

Khairpur 199 1.17 -1.48 1.64 3.02 0.44 4.58 3.2 3.64 981

Dadu 299 0.40 -0.76 1.60 1.4 0.68 1.53 4.4 3.45 1,074'

Hyderabad 595 0.28 -0.65 1.46 1.36 1.64 3.72 4.9 2.71 2,080

Badin ------2.89 769

Sanghar ------4.2 3.43 922

Tharparkar 360 1.88 -0.90 1.68 6.6 -0.48 1.88 2.9 4.72 1,501

Thatta 268 0.64 -1.48 1.56 -0.36 0.44 2.22 5.7 1.35 757

Karachi 136 3.20 2.72 2.11 3.78 10.07 6.04 5.0 4.78 5,353

Sind 3,410 0.92 -0.74 1.71 2.19 1.84 3.15 4.57 3.52 18,966

Source: Population Censuses -63-

Table 4.3: NET MIGRATIONBY DISTRICT, 1972

District Number Z

Jacobabad -8,660 -7.5

Sukkur 9,120 7.9

Larkana 580 0.5

Nawabshah 29,560 25.6

Khairpur 120 0.1

Dadu 6,700 5.8

Hyderabad 24,480 21.2

Sanghar 2,660 2.3

Tharparkar -8,660 -7.5

Thatta 12,470 10.8

Karachi 46,990 40.8

Sind 115,450 100.0

Source: Population Census, 1972 -64-

Table 4.4: DEGREEOF URBANIZATIONBY DISTRICT (%)

District 1961 1972 1981

Jacobabad 12.4 15.7 15.7

Sukkur 25.7 24.8 30.2

Shikarpur - - 18.4

Larkana 16.2 17.4 22.4

Nawabshah 12.9 16.1 16.2

Khairpur 9.6 15.8 25.1

Dadu 11.3 12.5 14.0

Hyderabad 40.0 36.6 45.9

Badin - - 10.7

Sanghar 16.3 19.2 21.5

Tharparkar 12.9 16.3 17.1

Thatta 5e8 12.9 11.0

Karachi 93.6 97.5 95.3

Sind 37.8 40.7 43.4

Source: Population Censuses ANNEX 5 -65- Page 1

REVIEW OF KARACHI'S ECONOMIC CONCENTRATION

The metropolitanarea of Karachi is dominant in terms of economic activity, not only in Sind but in Pakistan as a whole. Although its population share is quite high (about 6 percent of total population and 22 percent of the urban population),this is far exceeded by its shares of economic indicators. Karachi accounts for more than one-half of the country's bank deposits, two-thirds of the issued capital of companies, one-sixth of gross domestic product, one-quarterof Federal revenues and more than one-fifth of national savings. The level of per capita income in Karachi is more than two-and-three-quartertimes that in Pakistan as a whole and more than three-and-a-halftimes that in Sind. Its rate of population growth has slowed down compared with the 1950s and 1960s to about three-quartersof the rate prevailing in those decades. Although fertility rates are somewhat lower t]hanin the rest of Pakistan, this is offset by higher inmigration rates. More than one-half of its growth is accounted for by inmigration,and about four out of every five migrants come from other provinces rather than from Sind itself. This suggests that measures to promote the developmentof other towns in Sind would have little impact in slowing down the growth of Karachi unless they were accompanied by direct interventionto control this growth.

Tables 5.1 to 5.3 present some more detailed evidence on Karachi-s shares in economic activity. Karachi's labor force share is little different from its population share, but it dominiatesthe rest of Sind in utilities and services though not (perhaps a little surprisingly)in mining and manufacturing and in construction(Table 5.1). However, this latter result reflects the higher productivityof Karachi's labor more than a low weighting of these sectors, since in terms of GDP Karachi in 1974-75 accounted for 38 percent of national GDP in constructionand more than 31 percent of manufacturingGDP (see Table 5.2). Only in the transportand communicationsand the banking and insurance sectors is Karachi equally dominant. Apart from the obvious under-representationin agricultureand mining, Karachi is not prominent in the public administrationand defense sector in spite of being the provincial capital and the fact that many national agencies remained in Karachi after the transfer of the national capital to Islamabad.

Karachi's role in the large-scalemanufacturing sector (in terms of value added) varies widely from sector to sector within Pakistan though it dominates the provincial manufacturingsector with the exceptions of food and non-metallicminerals (see Table 5.3). In the national context Karachi is particularlystrong in rubber, tobacco, transport equipment, leather, metal production,printing and publishing, ejectricalmachinery and furniture while it maintains only small shares in the paper, machinery, footwear, food and drink and non-metallicmineral industries. Nevertheless,35 percent of value added in Pakistan-s large-scalemanufacturing sector as a whole is generated in Karachi, supporting the hypothesis that its monopoly as a seaport and -66- ANNEX5 Page 2 predominanceas a financial center have made it the magnet for large-scale manufacturing.

In spite of a general policy to reduce the concentrationof economic power away from Karachi, the siting of four national projects will reinforce Karachi's position. These projects are the Pakistan Steel Mill project at Bin Qasim, the second seaport at Bunder Qasim, the railway marshalling yard at Pipri and the export processing zone. These projects alone could add about 100,000 formal sector jobs. The steel mill, for example, currently employs 34,000 persons (during the constructionphase) and will employ 15,000 skilled workers when fully operational. It is Pakistan-s first integrated iron and steel mill with an eventual capacity of 2 million tons of steel per year. Its developmentis based on the use of imported ore and other raw materials combined with Sharighi coal from Baluchistan and other indigenous raw materials such as limestone,dolomite and fireclay. The steel mill is also a major factor in the justificationfor and the location of the second port, though other important commoditieswill include rice and wheat exports, phosphates and fertilizers,and crude oil imports. Without the steel mill's demand, the second port might have been deferrable for some years through improved management at the existing port, whose cargo load grew modestly compared with other major world ports. Between 1971-72 and 1979-80, imports doubled (from 6.15 to 12.36 million tons) while exports increased by less than 50 percent (from 2.47 to 3.63 million tons).

Although there is supposed to be a ban on new industries in Karachi, the ban is far from effective. First, it is not difficult to evade. Second, there are 31 industries excepted from the restriction,including not only marine-relatedindustries (e.g. shipbuilding,seafood canning, fishmeal) but activities as diverse as building components, clothing, furnitureand light engineering. Third, and most important, the most energetic government attempts to promote industrial development,while not taking place in Karachi itself, are located in the greater Karachi metropolitanregion. These are the new industrial estates at Hub Chowki, in Baluchistan but only 24 kilometers from Karachi, and in Dadu district, about 80 kilometers away from Karachi but well-connectedto it by the superhighwayfrom Hyderabad.

The point about these estates is that they are located so as to benefit from the Federal government's industriallocation incentives,namely the import duty relief on capital equipment and the five-year tax holiday. All Baluchistanis eligible for these incentives while Dadu is one of the three eligible districts in Sind. The combinationof incentives, lavish infrastructureprovision and proximity to Karachi is difficult to resist. This explains the intense demand for sites, particularlyat Hub Chowki, the nearer site.

A recent survey of 31 projects designated for Hub Chowki suggested that 45 percent of the investmentswould also have occurred without the concessions. While the revenue losses from the concessionswould be substantial, the governmentwould neverthelessbe a net fiscal beneficiary over a -67- ANNEX 5 Page 3 ten-year period. However, the industries developing there are highly capital-intensive(with capital-laborratios almost twelve times higher than the Fifth Plan average), overwhelminglylarge-scale specializing in intermediate goods, and almost all of them are Karachi-basedfirms. Moreover, they would rely heavily on imported raw materials, use non-local labor (many of them from Karachi rather than from Baluchistan)and have negligible export potential.

In other words, the economic and social benefits from the new industrialestate will be much less than they might have been, and the evidence is quite strong that many of the firms are relocating from Karachi or expanding outside Karachi merely to obtain the benefits without having to sacrifice much by moving to an underdevelopedregion. Furthermore,the Hub Chowki estate is a high investment, estimated at Rs 280 million by 1985, and requires much supporting infrastructuresuch as the doubling of electric power from the local KESC grid station and the constructionof the Lasbela Branch Canal from Hub Dam. In addition, a new township of 600 hectares is planned for worker housing. The situation in the Dadu district industrial estate is very similar, with costs running about Rs 220 million for a 2,000 hectare estate.

The reinforcementof economic concentrationin the greater Karachi region is in conflict with Sind's policy to promote spatial redistribution, because the expanded industries create additional needs for infrastructure and services that are illogical to deny once the initial location decisions have been approved. Thus, the severe shortages of water, sewerage capacity, transportand electric power create irresistibledemands for huge investment projects that could imply a cutting back on planned projects in other parts of Sind. One possible easing of this dilemma is to move forward at a much faster rate to full cost recovery. -68-

Table 5.1: LABOR FORCE SHARES (% OF PAKISTAN),1974-75

Sector Sind Karachi Rest of Sind

Agriculture 22.78 0.73 22.05

Mining and Manufacturing 31.44 10.46 20.98

Construction 47.64 11.34 36.30

Utilities . 17.45 17.09 0.36

Transport 37.72 15.90 21.82

Trade, Commerceand Banking 28.14 12.31 15.83

Services 18.80 12.70 6.10

Total Labor Force 25.08 5.59 19.49

Population (1981) 22.64 6.09 16.55

Source: Labor force data from United Nations Centre for RegionalDevelopment, RegionalDevelopment in Sind (1976),Vol. 1, Book 1.

PopulationData from PopulationCensus. -69-

Table 5.2: KARACHI'S SHARE IN PAKISTANGDP (%), 1974-75

Sector Share

Agriculture 1.2

Mining 2.6

Manufacturing 30. 7

Construction 38.0

Utilities 13.9

Transport and Communication 30.1

Trade 20.6

Banking and Insurance 33.7

Dwelling Ownership 20.2

Public Administration and Defense 10.6

Services 16.6

Total 16.1

Source: UNCRD,Regional DeveloLment in Sind (1976), Vol. 1. -70-

Table 5.3: KARACHI'S SHARE OF LARGE-SCALE MANUFACTURING (GROSS VALUE ADDED),

1969-70

Karachi'sShare as % of:-

Industry Pakistan Sind

Food 14.6 48.1

Beverage 15.5 100.0

Tobacco 55.7 94.1

Textiles 33.2 69.7

Footwear 11.8 92.0

Wood

Furniture 43.8 100.0

Paper 9.7 86.2

Printingand Publishing 46.8 97.3

Leather 49.7 87.0

Rubber 87.0 100.0

Chemicals 39.5 74,4

Petroleumand Coal - -

Non-MetallicMinerals 15.8 36.6

Base Metals 36.7 100.0

Metal Production 48.5 82.5

Machinery 10.4 85.3

ElectricalMachinery 44.7 100.0

Transport 5Oi6 lQ0.Q

MiscellaneousManufacturing 32.1 65.6

Total 34.9- 68.8

Source: UNCRD, RegionalDeveloipment in Sind (1976),Vol. 1, Book 1. ANNEX 6 -71- Page 1

EMPLOYMIENT IN SIND

1. The employment situation in Sind is somewhat obscure because of the sparsity of data and because of the fact that the few statistics that are available apply only to the formal sector which accounts for only a small fraction of total jobs and income-earning opportunities. Agriculture absorbs most of the working population (employs 80-85 percent of the rural labor force, though underemployment may be in the 40-50 percent range), but it is barely covered in the formal sector survey of establishments carried out by the Directorate of Labor in the provincial government (see Table 6.1). Similarly, the manufacturing employment captured in this establishment survey (172,000 in 1977/78) is significantly less than the employment in manufacturing reported in the 1975/76 Census of Manufacturing Industries (234,500). Moreover, the estimate is based on the response of 1,362 registered manufacturing establishments out of 2,326 establishments on the mailing list; it is not known how many of the non-respondents were defunct firms or merely failed to reply. There are no data on the informal sector, while most of the published information refers to medium and large-scale industrial firms rather than to small-scale industry which is so critical to the industrial future of the province outside Karachi. The consequence of this severely deficient data base is that any interpretation of the sectoral and interdistrict distribution of employment based on these data have to be treated with extreme caution.

2. Table 6.1 presents the results of the establishment survey for 1977/78. The low levels of employment for agriculture and for wholesale and retail trade are indicative of the limited coverage of the survey, though manufacturing, community and personal services and the financial sector are better represented. 1/ Hence, the distribution of employment among districts in Table 6.2 should be considered with caution. Karachi accounts for more than 70 percent of the total, and Hyderabad, Sukkur and Dadu also figure prominently. The year-to-year changes, such as the fluctuations in Khairpur, the decline in Hyderabad since 1972/73 and the growth of employment in Suk- kur, might reflect variations in the response rate more than trends in employment.

3. With regard to the prospects for dispersing employment and population within the province, the manufacturing sector is critical. This is because the performance of the manufacturing sector within a particular area will have a multiplier effect on the level of total employment. The manufacturing sector is quite important in the Pakistani economy, accounting for about 15 percent of GDP. Of this, the large-scale manufacturing sector is responsible for about 70 percent of this contribution.

1/ 35 percent of employment is in the government sector, 36.3 percent is private and the rest is semi-government. -72- ANNEX6 Page 2

4. The small-scale industrial sector is important from the labor-absorptionperspective, since it employs about three-quarters of the industrial labor force. It also accounts for 45 percent of manufacturing exports (or one-fifth of total exports). The small-scale industrialsector has other important characteristics. First, it is the more dynamic component of manufacturing,probably underestimatedin the GNP statisticsand growing at an annual rate of about 7 to 8 percent. Second, it is dominated by the private sector, whereas public ownership remains important in the large-scale industrial sector even after the denationalizationof 1978. Third, it uses mainly local labor and materials and, given its export orientation,this means that it makes a sizeable contributionto the balance of payments. Although productivityis low, it can serve local needs at approximately one-half of the cost of imported equivalents. Finally, it produces among other goods critical inputs to the agriculturalsector such as machinery, pumps and wells.

5. The large-scalemanufacturing sector, on the other hand, has been far from strong. As Table 6.3 shows, the index of industrial production in Sind barely increased between 1969/70 and 1976/77 (though it did rise thereafter), and its performancewas inferior to that of Pakistan as a whole. Large-scale manufacturinghas suffered from several problems: nationalizationfor much of the last decade, exchange rate problems, lack of resources for capital investment, low productivity, limited foreign and domestic demand, and the scarcity of vigorous entrepreneurs.

6. Manufacturingremains heavily concentratedin Karachi, in spite of difficultiessuch as higher electricity tariffs 1/ and a certain skilled labor shortage which is due to emigration to the Middle East. But locations in the interior are also unattractivefor several reasons, such as power breakdowns, poor telephone communications,a scarcity of managers and skilled labor, and the absence of technical colleges and training institutions. Thus, the only locations outside Karachi to which large- and mediumr-scale industrialestablishments appear willing to relocate are the nearby industrial estates at Hub Chowki and in Southern Dadu, which both offer the required infrastructureand the available industrial incentives.

7. Hence, it is not surprising that the distributionof manufacturing employment data among districts of Table 6.4 show a massive concentrationof industry in Karachi and Hyderabad (almost 91 percent of employment). Since Dadu accounts for a further 3 percent, the other districts represent only 6 percent of the province-smanufacturing employment. However, the average establishmentsize of these firms was 172 workers so that the Census of ManufacturingIndustries clearly refers only to large-scale establishments.

1/ KESC supplies electricityto industrialconsumers in Karachi at a higher cost than WAPDA, and also imposes a variable surcharge. -73-- ANNEX 6 Page 3

If data were available on small-scaleindustry, they might indicate a somewhat more dispersed pattern of employment.

8. Table 6.5 re-examinesthe marnufacturingemployment data of Table 6.4 in terms of specific industries. Textiles dominate Sind's industrial structure with more than 37 percent of marnufacturingemployment. Other important industries are drugs and chemicals (17 percent), non-metallicminerals (mainLy cement; 9 percent), food and drink (7 percent), and transport equipment (7 percent). What is particularlyinteresting is that the geographical distributionof employment between Karachi and the rest of Sind varies widely from one industry to another. Some industries are located only in Karachi; these include transport equipment, fabricated metal products, electrical machinery, other manufacturing,rubber, glass, clothing, plastics, non-ferrousmetals, scientific instruments,and photographicand optical equipment. Other industriesare found only outside Karachi; this smaller list includes leather, printing and publishing, cotton ginning, paper and paper products, furnitureand footwear. Only the textiles and food industries have a reasonablybalanced geographicaldistribution.

9. The geographicalimbalance is hardly surprising. Apart from resource-basedindustries, almost all large and medium-scaleindustries are heavily concentratedin Karachi. This reflects not only the extreme differences in the availabilityof infrastructure,accessibility to markets and other locational advantagesbut also the absence of strong industrial location incentives. The only incentives available are the five-year tax holiday and the import duty relief on capital equipment. But these incentivesare currently offered only in three districts--Jacobabad,Shikarpur and Dadu. The first two are among the most isolated districts in Sind and among the least likely to attract footloose industry; it is not therefore unexpected that there has been no entrepreneurialresponse. In Dadu, there has been a significantresponse, but the southern end of the district borders on Karachi and a large and easily accessible industrial estate is being promoted in the district close to the superhighway. Industrial estates at other locations such as Sukkur have been failures, probably for a mix of reasons: gaps in infrastructureprovision, limited accessibility,the lack of incentives,and the restricted industrialpotential.

10. A constraint on the growth of industry everywhere in Pakistan has been the difficulty of obtaining capital, but within Sind this difficultyhas been more severe outside Karachi. The Industrial DevelopmentBank of Pakis- tan makes loans to industry at 13 to 14 percent, i.e. at a rate of 3 to 4 percent above Bank rate. But there are many bureaucraticdelays in obtaining loans. The total amount of loans disbursedin Sind has shown no upward trend over the last twenty years, and has not regained the peak of Rs 136.4 million -74- ANNEX 6 Page 4

of 1975/76. 1/ Most of the disbursementsof that year went to Dadu and Khair- pur (Table 6.6). Since then, most of the loans have gone to Karachi, Dadu and Thatta. Apart from the spasmodicattempts to support the declining industrial base of Khairpur, there have been virtually no IDBP loans to Northern Sind. Thus, although IDBP would appear to have made some attempts to disperse its loans, these attempts were confined (with the exception of Khairpur) to districts adjacent to Karachi.

11. The concentrationof large-scaleindustry in Karachi and the limited locational advantages for such industries in the rest of Sind (with the exception of a few resource-based industries such as cement) imply that the industrial prospects for the interior depend heavily on the promotion of agro-based industries (probablysmall-scale to avoid the problems associated with instabilityin raw material supplies) and the small-scale industrial sector. In view of the dynamism of the small, compared with the large-scale manufacturingsector, this offers opportunitiesfor the successful industrializationof urban centers outside Karachi. As pointed out above, strengtheningthe small-scalesector has many advantages for the economy such as its favorable balance of payments effects and its capacity for absorbing labor. However, although no hard data are available, impressionistic evidence suggests that its potential has not been exploited in the interior cities. The most important explanationsof this failure are probably the lack of capital, the inability to identify market opportunitiesand the absence of entrepreneurship.

12. There are several small-scale industrial estates in the province at Hyderabad, Sukkur and Larkana, but their rate of developmenthas been pain- fully slow. The financial institutionsappear to have little interest either in small-scale industry or in the interior, perhaps because they are central- ized in Karachi, perhaps because of the high administrativecosts and greater risks involved in lending to small firms in the periphery. Recently, IDBP through the commercial banks has establisheda $30 million IDA credit for small-scaleindustry, the first scheme of this kind in Pakistan. Of this sum, $26 million have been designated for five sectors (sports goods, surgi- cal instruments,light engineering,leather and textiles), with the remainder allocated for promotional activities. This concentrationwill not help the smaller urban centers in Sind very much, since the major opportunitiesthere are for small agro-processingplants such as rice mills, flour mills, sugar cane processing,and fruits processing, for handicraft-typeindustries such as carpets and pottery, and workshop activities such as woodworkingand agriculturalimplements. One possible avenue for policy innovation is to develop strategies to encourage the diversion of remittances from the Middle East into investment in small-scaleindustry. The possibilitiesfor this have been recognized,but no action has been taken as yet.

1/ This peak was itself unusually large since it is necessary to go back to the years 1963-64and 1964-65 to find disbursementsover Rs 100 million. -75- ANNEX6 Page 5

13. The Sind Small Industries Corporation has developed a 3-year plan to respond to the problems of small-scaleindustry in the province (SINDEP - Small IndustriesDevelopment Plan, 1981-84). The objectives of the plan are: to assist industrial dispersal by relieving infrastructurepressure; to correct rural-urbanimbalances; to create jobs in rural areas to reduce rural-urbanmigration; and to introducenew technologiesinto the interior. The specific short-term elements of the plan are: to promote the industrial developmentof the three incentivedistricts (Jacobabad,Shikarpur and Dadu); to develop agro-based and resource-basedindustries integrated into the local economy; to supply cheap credit localLy; to build a network of manpower training centers; and to train women in handicraftsand other activities to boost rural incomes. With the exception of raising the number of training centers from 23 to 60, these tasks have not been successfullycompleted. The plan aLlows for a total sum of Rs 20.74 million for manpower training (aiming at 6,175 skilled workers) out of an anticipated Rs 42.91 million of public sector developmentexpenditure (plus Rs 14.93 million of non-development expenditures).1/ It is hoped to develop three new small-scaleindustrial estates in the incentive districts. The Corporation'sfield and headquarters staff would be increased by 50 percent. Nevertheless,the resources remain inadequate for the task at hand. As Table 6.7 shows, only Rs 58 million were disbursed as loans to small-scaleestablishments in the three years 1978-79 to 1980-81, slightly one half the amount sanctioned. Public sector allocation to the Sind Small Industries Corporationin 1981/82 is only Rs 7 million (Table 6.8); although this sum is distributed over 9 districts, Karachi and Hyderabad were to receive almost half of the total allocation.

14, To sum up, the prospects for iindustrialdispersal in Sind depend very heavily on the promotion of small-sca:Leindustrial establishments,especially in the agro-based sector. Although the small-scale industrial sector is more dynamic than the large-scalesector, iithas not developed as rapidly as might have been hoped in the cities of the interior for a host of reasons, but especially the limited access to capital and insufficienttechnical assistance. The SINDEP Plan of 1981-84 is structured on the right lines, though its priorities could have been reordered to give more emphasis to the credit problem. But the extent of public financial resources available to assist the small-scalemanufacturing sector remains much too small for the task in hand.

1/ Anticipated private investment in the sector is Rs 225 million. -76-

Table 6.1: FORMAL SECTOR EMPLOYMENTBY INDUSTRIALGROUP IN SIND, 1977/78

IndustrialGroup Employment

Agriculture,forestry and fisheries 3,614

Mining and quarrying 1,541

Manufacturing 171,893

Electricity,gas and water 23,072

Construction 12,804

Wholesaleand retail trade, restaurantsand hotels 9,101

Transportand communication 32,131

Finance, insuranceand real estate 61,955

Community,social and personal services 132,462

Total 448,573

Source: Directorateof Labor, Governmentof Sind. -77-

Table 6.2: DISTRIBUTIONOF FORMAL SECTOR EMPLOYMENT

BY DISTRICT,1972/73 TO 1977/78

District 1972/73 1975/76 1976/77 1977/78

No. of Employment No. EEL No. Emp. No. Emp. __% Firms

Jacobabad 55 4,028 29 2,999 31 4,422 42 5,116 1.14

Sukkur 104 13,129 91 8,501 117 16,650 184 22,117 4.93

Shikarpur ------34 1,528 0.34

Larkana 75 6,435 46 5,497 44 5,265 66 6,374 1.42

Nawabshah 48 6,249 31 7,643 32 7,744 43 8,423 1.88

Khairpur 54 9-,180 49 5,714 49 6,166 78 8,228 1.83

Dadu 84 18,091 78 19,462 80 20,196 79 20,051 4.47

Hyderabad 378 43,261 275 36,815 309 34,223 299 37,417 8.34

Badin - - 7 2,329 8 2,437 8 2,437 0.54

Sanghar 47 4,611 24 4,327 23 4,451 23 4,450 0.99

Tharparkar 51 7,402 39 9,646 47 10,545 39 8,391 1.87

Thatta 42 10,244 36 8,678 32 7,046 32 7,046 1.57

Karachi 1,824 273,732 1,798 305,294 1,901 298,150 2,018 316,995 70.67

Sind 2,757 396,334 2,503 416,900 2,673 417,295 2,945 448,573 100.00

Source: Directorateof Labor, Governmentof Sind, Annual EstablishmentEnquiry -78-

Table 6.3: INDUSTRIALPRODUCTION INDEX IN SIND

Year Sind Pakistan

1969/70 100.0 100.0

1970/71 109.3

1971/72 106.3

1972/73 113.9 115.4

1973/74 125.6

1974/75 116.6 120.5

1975/76 113.3

1976/77 104.0 117.1

1977/78 115.3

1978/79 121.1 132.7 -79-

Table 6.4: DISTRICT DISTRIBUTIONOF MANUFACTURINGEMPLOYMENT, 1975/76

Average Establishment District No. of firms Emplomentize

Sukkur 25 2,091 0.89 84

Larkana 6 135 0.06 23

Nawabshah 7 1,764 0.75 252

Khairpur 5 3,993 1.70 797

Dadu 26 7,337 3.13 282

Hyderabad 66 31,784 13.55 481

Sanghar 3 414 0.18 138

Tharparkar 5 2,052 0.88 410

Thatta 9 2,068 0.88 230

Karachi 1,208 181,446 77.38 150

Others 2 1,414 0.60 707

Sind 1,362 234,498 100.00 172

Source: Census of ManufacturingIndustries -80-

Table 6.5: SECTORAL DISTRIBUTION OF MANUFACTURINGEMPLOYMENT 1975-76

Employment

Sector No. of Firms Karachi Rest of Sind Total %

Food 151 8,087 7,449 15,536 6.62 Beverages 8 710 101 811 0.35 Tobacco 9 2,424 630 3,054 1.30 Textiles 420 67,072 20,300 87,372 37.26 Clothing 16 800 0 800 0.34 Leather and leather products 31 0 11,406 11,406 4.86 Footwear 13 0 257 257 0.11 Ginning 9 0 1,860 1,860 0.79 Wood and cork 9 283 366 649 0.28 Furniture 16 0 452 452 0.19 Paper and paper products 19 0 1,848 1,848 0.79 Printing and publishing 91 0 2,884 2,884 1.23 Drugs 46 14,657 323 14,980 6.39 Industrial chemicals 35 3,217 976 4,193 1.79 Other chemicals 68 16,820 3,010 19,830 8.46 Rubber 25 1,913 0 1,913 0.82 Plastics 19 769 0 769 0.33 Glass 10 1,420 0 1,420 0.61 Non-metallic minerals 28 3,253 17,426 20,679 8.82 Iron and steel 51 5,854 159 6,013 2.56 Non-ferrous metals 5 385 0 385 0.16 Fabricated metal products 109 6,988 0 6,988 2.98 Maachinery 49 6,187 89 6,276 2.68 Electrical machinery and appliances 37 5,806 0 5,806 2.48 Transport equipment 46 15,270 0 15,270 6.51 Scientific instruments 8 263 0 263 0.11 Photographic and optical equipment 4 129 0 129 0.06 Other manufacturing 30 2,655 0 2,655 1.13

Total 1,362 181,446 53,052 234,498 100.00

Source: Census of Manufacturing Industries Table 6.6: IDBP` LOANS SANCTIONEDAND DISBURSEDBY DISTRICT,1973/74 TO 1978/79

(millionRupees)

1973-74 1974-75 1975-76 1976-77 1977-78 1979-80

District Sanctioned Disbursed S D S D S D S D S D

Jacobabad 0.81 0.26 2.20 0.21 0.26 1.89 - - - 0.22 0.17 -

Sukkur 6.60 0.21 3.31 3.97 0.96 2.92 - 0.06 - - 0.61 0.15

Larkana 2.11 1.35 0.79 0.57 0.27 0.39 0.26 0.05 - 0.06 0.42 0.07

Nawabshah - 0.50 1.70 - 1.04 0.06 - 0.51 - - - -

Khairpur 9.80 0.24 51.89 0.07 20.60 46.61 - 2.43 0.30 5.29 - -

Dadu 49.35 7.57 33.64 3.97 19.83 75.31 0.17 0.51 0.05 1.29 19z64 17.87 w

Hyderabad 5.37 8.56 8.69 3.02 5.26 2.56 - 2,33 - 0.22 3.14 2.63

Sanghar - - 0.50 0.23 1.50 0.51 - 0.09 - 0.36 - 0.28

Tharparkar 1.03 ------1.29 - - -

Thatta 0.15 10,73 11.81 - 31.96 - 0.40 - 1.11 4.41 0.10 7.88

Karachi 41.44 10.77 26.21 31.22 35.32 6.16 27.34 2.65 43.40 23.28 36.05 49.60

Sind 116.71 40.19 140.74 43.26 117.00 136.41 28.17 18.48 46.15 35.13 60.13 78.48 l/ IndustrialDevelopment Bank of Pakistan Source: Planningand DevelopmentDepartment, Government of Sind, Bureau of Statistics,Development Statistics of Sind, 1980. -82-

Table 6.7: INVESTMENT IN SMALL-SCALE INDUSTRY, 1978/79 TO 1980/81

(Million Rupees)

Investment Investment Year Sanctioned Disbursed

1978/79 31.403 16.051

1979/80 34.407 19.657

1980/81 42.133 22.340

Total 107.943 58.048

Source: Sind Small Industries Corporation, SINDEP-Small Industries Development Plan, 1981/84. -83-

Table 6.8: DISTRICT EP2ENDITURESBY SIND SMALLINDUSTRIES

AND HANDICRAFTSDEVELOPMENT CORPORATION

(Million Rupees)

Revised Expenditure Allocation 1980/81 1981/82

Ongoing Projects

Sukkur 0.800 0.440

Dadu 1.665

Hyderabad 1.548

Sanghar 0.606

Tharparkar 0.800 0.440

Karachi 0.500 1.760

Total 3.765 4.794

New Projects

Shikarpur 0.700

Nawabshah 0.481

Dadu 0.400

Hyderabad. 0.270

Sanghar 0.188

Thatta 0.293

Total 2.332

Source: Finance Department, Government of Sind, Annual Development Programme, 1981-8k. ANNEX 7 -84- Page 1

INCOME DISTRIBUTION

1. The process of economic development has uneven impacts on the welfare of different income groups. An important question in developing countries experiencing urbanization is how the relative shift in population from rural to urban areas influences the distribution of income. Since rural incomes are much lower than those in urban areas, the presumption is that urbanization by raising the incomes of rural-urban migrants probably tends to make the distribution of income more equal. Even if this is generally so, it does not necessarily mean that the distribution of income within urban areas is more equal than in the rural sector.

2. There are few disaggregated data on the distribution of income by area. The only available information shedding light on the distribution of income within districts is from a 1978 household income survey carried out by the Sind Regional Plan Organization. 1/ Since the sample size was only 4,000 households, 2/ the spatial analysis remains quite aggregated. The only geographical divisions are between the "modern" and the "traditional" sectors (which means "Karachi" and the "Rest of Sind") and between "all urban" and "all rural" areas. Hence, comparison of the income distributions of the "modern" and the "urban" sectors sheds some light on the distribution of income in urban centers outside Karachi considered as a whole.

3. The basic data showing the distributions of household and total income shares by income size class are displayed in Table 7.1, but summarized in a more digestible form in Table 7.2. According to the survey, 52% of households had monthly incomes in 1978 below Rs 600 per month and this group accounted for 24% of total income. On the other hand, only 4.2% of households had an income level higher than Rs 3,000 per month, accounting for 13.3% of total income. However, the inter-area distributions provide the more interesting information. Less than 26% of households in Karachi had incomes below Rs 600 compared with 66% of rural households, while 7.3% of Karachi households and only 1.3% of rural households had incomes higher than Rs 3,000 per month. As for other urban areas, while 41.8% of households had incomes below Rs 600 per month, an intermediate position between Karachi and rural areas, 10.8% of households had incomes above Rs 3,000--a much higher share than in Karachi. Table 7.3 presents the basic data in a somewhat different way. The lowest quintile of households in Karachi accounted for 7.6% of income compared with 6.6% of income in other urban areas and 3.3% in

1/ M.B. Abbasi, Income Distribution Pattern in Sind (Sind Regional Plan Orgaanzation, X(arachi,larch 1992).

2/ 1,500 households were surveyed in Karachi, 700 in other urban areas and 1,800 in rural areas. -85- ANNEX 7 Page 2

rural areas. Conversely,the top 5% of households accounted for 11% of income in Karachi, 17.2% in other urban areas and 19.4% in rural areas.

4. The conclusionsfrom these data are very clear. First, the incidence of poverty is much lower in Karachi than in rural areas and is even significantly lower in Karachi than in other urban centers. Second, the distribution of income is much more equal in Karachi than in both the rural areas and the other urban centers. Since the urban centers occupy the middle position with respect to both poverty and income distribution,it may be concluded that urbanizationis associated with both a reduction in poverty and an improvementin the income distributionbut that metropolitanization (i.e., the continued growth of Karachi) has even more favorable distribu- tional effects. Strategies to slow down the rate of urbanizationhave the damaging side-effectthat they are regressivewith respect to the distribution of welfare, at least given the current institutionalframework (e.g., the existing distributionof land ownership).

5. Finally, Table 7.4 presents some informationon how much different occupationalgroups earn on average in differentareas. Urban earnings are significantlyhigher than rural earnings in all occupationswith the exceptions of catering and services. Income levels are about the same in Karachi as in other urban centers in several occupations (managers,professionals and productionworkers); in fact, urban professionalworkers earn somewhat more outside Karachi, perhaps reflecting a premium needed to attract such workers out of Karachi. On the other hand, in certain occupations (services,sales, catering and clerical workers) Karachi workers earn much more than in other urban centers. This could reflect, amnongother influences,the higher cost of living in Karachi since these sectors are much less likely to experience the supply inelasticitiesthat have plagued the production sector in the capitaL. Table 7.1: INCOMEDISTRIBUTION IN SIND, 1978

Sind Modern Traditional Urban Rural Monthly Income Households Income Hh Inc Hh Inc Hh Inc Hh Inc

Less than 200 20.31 3.45 6.32 0.51 24.05 2.55 8.50 0.70 28.19 6.12

201-400 16.60 9.36 6.22 2.17 19.39 6.89 7.80 2.94 22.47 13.64

401-600 14.84 11.37 13.12 7.12 14.90 9.93 14.50 7.60 15.08 13.88

601-800 9.81 8.86 10.85 7.37 9.26 8.47 11.50 7.62 8.67 9.68

801-1000 9.40 10.18 10.18 8.00 9.65 10.10 11.00 8.73 8.33 11.15

1001-1500 11.41 16.73 16.84 17.51 10.37 14.59 14.70 15.41 9.22 17.61 00 1501-2000 6.39 10.71 13.89 17.26 4.73 10.83 11.60 14.77 2.91 8.00

2001-3000 7.08 15.55 15.24 23.98 5.52 15.27 12.00 20.40 3.80 12.32

3001-4000 2.66 7.45 4.25 8.73 1.72 14.11 5.60 13.80 0.69 3.22

More than 4000 1.50 5.84 3.09 7.37 1.09 7.34 2.80 8.02 0.64 4.38

Source: Income Distribution Survey, Sind Regional Plan Organization. Table 7.2: INCOt2 DISTRIBUTION BY INCOMECLASS IN SIND, 1978

Percentage of Households P

Monthly Rest of Other Rest of Other Income Sind Karachi Sind Urban Rural Sind Karachi Sind Urban Rural

Less than 600 51.8 25.7 58.3 41.8 65.7 24.2 9.8 19.4 14.2 33.6

600-1500 30.6 37.8 29.3 35.9 26.2 35.8 32.9 33.2 29.4 38.4

1500-3000 13.5 29.1 10.3 11.8 6.7 26.3 41.2 26.1 22.3 20.3

More than 3000 4.2 7.3 2.8 10.8 1.3 13.3 16.1 21.4 34.0 7.6

Source: Table 7.2 -88-

Table 7.3: HOUSEHOLDINCOME SHARES,1978

Income Shares (%)

Households Sind Karachi Rest of Sind Other Urban Rural

Lowest 20% 3.40 7.64 2.12 6.57 3.34

Upper 10% 25.66 17.75 29.83 27.02 26.38

Upper 5% 16.48 11.03 22.04 17.19 19.40

Source: Income DistributionSurvey, Sind RegionalPlan Organization. -89-

Table 7.4: MEAN MONTHLY INCOME BY OCCUPATION (Rs.),1978

Occupation Sind Modern Traditional Urban Rural

Firmer 356 - 645 625 258

Professional 960 924 979 989 659

Managerial. 1,674 1,672 1,580 1,684 -

Clerical 696 796 584 717 433

Sales 708 934 436 721 522

CateriLng 327 476 224 325 343

Services 452 744 343 439 524

Production Worker 710 737 684 735 446

Source: Income DistributionSurvey, Sind RegionalPlan Organization. -90- ANNEX 8 Page 1

EXISTING GOVERNMENT INSTITUTIONS

1. Three primary tiers of Government exist in Pakistan: Federal, Provincial and Municipal. The structures of departments,committees and agencies and their inter-relationshipsare complex and changing. Set out below are the main institutionsat each tier of government which have significant roles in urban and regional developmentwith impact on the City of Karachi and Sind Province, together with notes on their main functions and brief observations.

Federal Government

2. While Federal Government has major strategic responsibilitiesand is the most powerful of the revenue collecting levels of Government,its day-to-day involvementin Provincial and Municipal affairs and policy is slight. The following paragraphs describe the main Federal Ministries with direct relevance to the urban sector.

3. Ministry of Local Government and Rural Development. This Ministry reviews major projects, prepares annual perspectivesand developmentplans (see Physical Planning and Housing below) and has sponsored regional studies. It has few executive functions. Perspective plans 1975-80 set physical planning targets, especially for shelter plot development. This Ministry has generally limited responsibilityfor urban development.

4. Ministry of Housing and Works. This Ministry has responsibilityfor Islamabad developmentand KDA's implementationof the Karachi Master Plan. It sponsors research (e.g., into rural migration to Karachi) and undertakes physical planning for large industrial complexes, e.g., Karachi steel mill. It prepares legislation on pollution control.

5. There is a potential for duplication of function between the Environ- ment and Urban Affairs Division of this Ministry and the Physical Planning and Housing Section of the Planning and Development Division (see below). The Ministry's role is limited in practice by staff availability and qualifications. The Public Works Department is responsible for the construction and maintenance of Federal Government buildings including residential estates for employees. There are eight such residential estates in Karachi (one of which is being demolished). Functions and responsibilitiesare not well coordinatedwith city planning at the local level.

6. Planning and Development Division. The Physical Planning and Housing section is responsiblefor national housing policy, spatial components of perspectiveplans and Annual Development Programmes. It provides technical assistance for physical planning and is responsible for review of major public sector investmentprojects.

7. Other Institutions. Several Federal agencies have a direct influence on urban developmentin Sind, especially in Karachi. These include the six -91- ANNEX 8 Page 2

Cantonment Boards in Karachi, the Karachi Electricity Supply Corporation,Sui Gas, Karachi Port Trust, Pakistan Railways and Karachi Transport Corporation. In addition, there are several Federal institutionswhich play important roles in allocating funds to all public projects including those concerning the urban sector. These are:

National Finance Revenue sharing functions between Commission tiers of Government.

National Economic Executive Committee approves Council projects of Rs 20 million or more. It supervises Provincial programs and has powers to give grants. The Executive Committee is chaired by Federal Minister of Finance.

Central Development Approves projects in excess of Working Party Rs 10 million.

Bank of Pakistan/ Allocates credit between sectors National Credit and determines proportions lent Consultative in each sector commercially and Council as soft loans.

House Building Lends relatively small amounts to Finance Corporation individualsand housing cooperatives as investmentson a profit sharing basis.

8. The Draft National Plan proposed to create a National Physical Plan- ning Council (NPPC), which would have the function to review and approve physical and environmental plans and to coordinate mainly nationwide strategic issues. Moreover, a National Physical Planning Agency was proposed to formulateand implement policies and plans in association with NPPC. Its functions would also include the collaborationwith others in reviews of plans and schemes, and the detailed planning in "national control areas", in consultation with Provinces.

Provincial Government

9. The main institutionsof significanceat the Sind Provincial level are Government Departments, the most important of which are described in the following paragraphs, along with relevant autonomous bodies.

10. Planning and DevelopmentDepartment. Responsible for overall planning, this department prepares the Provincial Annual Development Programme (ADP), coordinates the ADPs of line agencies and approves all major investment decisions and allocation of resources between sectors. -92- ANNEX 8 Page 3

11. The Sind Regional Planning Organizationis an autonomous agency under the Planning and Development Department and is responsible for preparing a Provincial Master Plan, although this exercise is currently in abeyance. Despite its multisectoralobjectives, the coordinationof this agency with other organizationsis relatively limited.

12. Department of Town Planning, Housing, Local Government and Rural Development. Apart from overseeing the municipal corporations,town committees and two developmentauthorities, this department is responsiblefor physical planning of urban areas outside Karachi and Hyderabad. It determines policy for housing and urban growth and for the conversion of agricultural land to urban uses. However, it has few professionalstaff and limited scope for action.

13. There are proposals to strengthen the Department'sdevelopment control functions under the Sind Building Control Ordinance, to the level of individualbuildings. It is difficult to visualize how this could be effective given current staff constraints.

14. Department of Public Health Engineering. This department is responsible for implementationof water, sewerage and drainage systems outside Karachi and Hyderabad. It approves water tariffs, but responsibilityfor their collection rests with the local councils.

15. Department of Industry, Mineral Development,Transport, Excise and Taxation. This recently created department oversees industrial development and policy; gives industrial credits and incentivesand coordinatesprovision of infrastructureand services for industrial development. It has jurisdiction over Sind IndustrialTrading Estate and Landhi IndustrialTrading Estate. It also oversees the Sind Regional Transport Corporationand the Regional Transport Authority. In addition, it is responsiblefor the collection of taxation and excise duty in the Province.

16. An important agency under this department is the Sind Small Industries and Handicraft DevelopmentCorporation, whose objective it is to encourage small scale industrialdevelopment outside Karachi. It receives its funds through the Sind State Bank and the Industrial DevelopmentBank of Pakistan and also benefits from a recent IDA credit.

17. Other Institutions. There are several provincial agencies which are of particular relevance to urban development. Among them is the Sind State Bank, which has several important functions including a loan guarantee fund for small scale businesses. In the housing sector, CooperativeHousing Societies undertake projects for members ('miniature"KDA's). These are financed in part by HBFC loans to members. There are about 800 such societies in Sind, of which 560 are in Karachi. Their contributionto the shelter sector has not yet been substantial. -93- ANNEX 8 Page 4

18. Divisional Level. Some of the provincial government functions are performed on the basis of the three divisions into which Sind is subdivided: (a) Karachi, (b) Southern Sind with headquartersin Hyderabad, and (c) North- ern Sind with headquartersin Sukkur. The Karachi Division covers the area of Karachi District, whereas the other two divisions comprise six districts each. The Divisional Commissions,supported by coordinatingcommittees, are responsible to the Government for the activities of the Provincial Government at thal:level.

19. Local Government. Karachi, Hyderabad and Sukkur are Corporations, and autonomous DevelopmentAuthorities have been created in Karachi and Hyderabad. In addition, there are 22 lMunicipalCommittees and numerous town committees. At the District level, coordinatingcommittees exist which include representativesof municipal and town committees.

20. Karachi Municipal Corporation. Together with the Karachi Development Authority (see below), KMC is the main corporate authority in Karachi under the Sind Local Government Ordinance. it is a representativebody with 167 elected counsellorsand a mayor. The main functions of KMC are the provision and maintenance of municipal services (e.g., drainage, sanitation,street lighting, road maintenance,public health, and aspects of education), for which purpose a number of line departmentshave been established.

21. Although Karachi DevelopmentAuthority is responsible for new area development,the operation and maintenanceof the municipal services provided in such areas remain the responsibilityof KMC. Responsibilityfor development operation and maintenancein the water and sewerage sector has been handed over to the newly created Karachi Water and Sewerage Board.

22. KMC is also responsible for the planning, implementationand maintenance of the katchi abadi upgrading and regularizationprogram and for finding the necessary developmentexpenditure from its own resources. KMC is obliged by Government to fund its annual budget itself, receivingonly limited financial assistance from Provincial Government.

23. Karachi DevelopmentAuthority. Unlike KMC, KDA is a non-representativebody chaired by the Commissionerof the Karachi Division of Sind and coming under the Provincial Department of Town Planning, Housing, Local Government and Rural Development. Its principalactivities have been the production of serviced building plots, and of apartments. In addition, its responsibilitiesinclude traffic engineeringand, in new areas, provision of new infrastructuresuch as roads, water supply and sewerage.

24. KDA is also the planning authority for Karachi and is responsible for updating the Karachi Master Plan and the preparation of the longer term perspective plan. KDA can be requested by Federal or Provincial Government to undertake new area development projects within or beyond the boundaries of Karachi Corporation, either directly or on behalf of cooperativehousing societies. The master plan itself covers a wider area than Karachi, extend- ing into parts of Sind and Baluchistan. -94- AANNEX8 Page 5

25. KDA is charged with recovering all of its developmentcosts which it does through a differentialpricing policy in the disposal of plots.

26. Karachi Water and Sewerage Board (KWSB). Created in February 1983 as an autonomous agency under the KMC, the Board has taken over responsibility for the production and distributionof water, its operation and maintenance, and the recovery of costs. The KWSB has also taken over the sewerage operation previously performed by KMC. The Board of KWSB consists of six members, the Mayor of KMC (Chairman),the Deputy Mayor, two elected councillors,a GOS appointee and the Managing Director. -95- ANNEX 9 Page 1

FINANCES AND RESOURCE FLOWS

1. In this annex, the expendituresof Federal, Provincial and Municipal Government in Sind and Karachi are consideredby broad sector. Development and non-developmentexpenditures are identifiedwhere appropriate,as are revenues by source, distinguishingresource transfers between different levels. The major weaknessesassociated with the revenue sources are also identified.

Federal Level Finances

2. No attempt is made to assess Federal finances in total, but only those aspects that impact on Sind and Karachi. The fiscal situationhas for some years been a source of concern to the Pakistan Government. Strides were made in 1980 to overcome the problems with the overall budgetary deficit reduced from 8.4% in 1979 to 5.9% of GNP at market prices, and this was expected to be furth,erreduced to 4.2% in 1981. The financing of the developmentbudget from domestic resources improved signifiicantlyin 980. Governmentrevenues rose by 25% in 980 over the previous year with tax revenues increasing by 30% and income tax collectionsrising 50%. At the same time, non-development expenditureswere restrained significantlymore than in the recent past, being limited to a 15% increase.

3. As far as developmentexpenditure is concerned,the scale of past commitmentshas reduced the opportunitiesfor new initiativesand resulted in difficulitrephasing decisions, although aid-financeddevelopments have not been affected to the same extent. However, the recent general improvementin finances led to a budgeted increase in development expendituresfor 1981, up by 10% in real terms over the 1980 figure. Again, the Federal Annual DevelopmentProgram (ADP) gives priority to the completion of past commitmentsand ongoing projects and a holding back on new projects. Prioritieslie with support services to agriculture,developments of water resources, social sectors, rural developmentand the development of domestic energy resources. Funds allocated to industry are mainly for the completion of the Karachi steel mill. To finance this developmentspending the Government is relying on a fairly rapid growth of revenues, especially income-tax revenues, but including increased self-financingby public sector agencies

4. The Constitutionallows for a multi-levelstructure for tax collection and revenue sharing. Although all three governmentaltiers can raise taxes, the major powers of taxation lie with the Federal Government which controls import duties, excises, sales tax and income tax on non-agriculturalsectors. The most important resource transfer flows under the revenue sharing arrangementsare from Federal to Provincial levels. The National Finance Committee determines the Provincial revenue shares and in the past these have been broadly in line with population. The Federal Governmentalso provides loans and grants for developmentpurposes. In the -96- ANNEX 9 Page 2

case of Sind, Federal assistance amounts to two-thirds of total expenditure and the Province's dependence on Federal assistance is growing.

5. A few words are in order concerning the Islamization of Pakistan's economy. This is a complex subject and only the first steps have been taken, principally in the introduction of religious levies (for example, the Zakat, a levy on institutionalsavings of Rs 2,780 or more held for at least a year) and the removal or reduction of interest on certain loans (for example, the HBFC now jointly owns the property which it finances with zero interest loans, along with the purchaser, for a specified time period, but is entitled to a share of the rent or of the capital if the property is sold). There is some concern that these measures are adversely affecting bank deposits and discouragingthe payment of interest on outstanding loans. General uncertaintyabout the Islamization process may be discouraging private investment. There is a danger that interest-freelending could develop into an extensive system of subsidized credit at an increasing cost to the Government. The Government is thereforeproceeding slowly and carefullywith these matters to ensure viable alternativesare employed when Islamic principles are adhered to.

The Finances of Sind Province

6. Sind Government finances have deterioratedin the past decade with own revenues growing more slowing than current non-developmentexpenditure. Substantial Federal assistance has been insufficientto meet current expenditureswith the result that the current account is substantiallyin deficit. Sind development expenditureshave risen, however, and are being financed entirely by loans and grants from Federal Government.

7. Provincial taxes have been confined to relatively minor levies such as limited excise duties, property taxes and land revenues, and cesses on agriculturalproduction and employment in large-scale industrialunits. In recent years, land revenues have been abolished and property taxes, which are shared with the Municipalities,now only yield 15% to Sind and 85% to local bodies. Own revenues have been sufficient to finance only about 30% of total expenditureand throughout the 1970s own-tax revenues rose only at about 16.2% per annum and non-tax revenues at 14.2% per annum while growth of GDP at current market prices averaged 19% per annum.

8. The narrow tax base is part of the Province's fiscal problems. Recent Federal level decisions have also had their impact as follows: Rs 60.0 million lost due to abolition of land revenues in 1979; loss of excise duties on wines and other alcohol of Rs 82.5 million in 1977 and 1979; loss of stamp duties in 1979 of Rs 15.0 million; closure of race tracks in 1977 losing Rs 20.0 million betting tax; raisingMunicipalities' share of property tax to 85% resulted in Rs 43.1 million loss; loss of entertainment duty in 1977 led to Rs 24.3 million loss, and refund of 85% of betterment tax to local bodies in 1979 led to Rs 13.5 million loss. The total losses are of the order of Rs 258 million. -97- ANNEX 9 Page 3

9. Non-developmentand developmentexpenditure increased roughly in line in the 1970s. Most of the non-developmentincrease was in education, health, irrigation,and law and order with debt servicing becoming an increasing burden. Education accounts for about one-third of this non-development budget and debt servicingone-fifth. About half the increase in the 1970s was due to higher wages and salaries, partly as a result of pay and partly a substantialincrease in employment (which rose by 90% in education).

10. About two thirds of the development program has been funded by Federal loans and a further 23% by foreign loans, the servicingand repayment of which are the responsibilityof the Sind Government. Most of this development expenditureis disbursedby the Provincial Government in its areas of statutory responsibility.

11. Three years ago the Federal Government set up a Taxation Commission for Sind which was due to report at thieend of March 1982, in the context of the increasing fiscal difficultiesof the Province. It is understood this recommends,among other things, revisions to the property tax system to strengthen the Provincial revenue base and reduce the current fiscal imbalance.

The Finances of the Karachi Municipality

12. In each of the past ten years, the Karachi Municipal Corporation (KMC) has had a small surplus on current account but an overall deficit due to "development"expenditure. The resource gap has been funded in recent years mainly by capital receipts from the sale of assets, especially land, and depletion of the general fund.

13. Primary municipal functions such as the maintenance of water supply, sewerage, drainage, conservancyand fire services, city roads, parks and recreationalfacilities account for about 60% of KMC's current expenditure and 80% of development expenditure. Social services (educationand health) account for the rest. Rising wage and salary bills, with increases in unit costs and expansion of the workforce, have accounted for a much faster rise in current expenditure than "development." Moreover, charges are inadequate to cover service costs which are expected to be financed from designated revenue sources, and KMC-s general revenues are used to cover operating deficits on water, sewerage, conservancyand fire services. Indeed, water supply charges are in a dire position with large numbers of inoperative meters, inadequate meter coverage and low tariffs.

14. Overall, KMC's real per capita expenditureshave declined in the 1970s. At the same time, the Municipality has got into increasing financial difficu:Lties.Yet, the largest source of revenue, the octroi, has grown on average at about 20% per annum, which rate exceeds that of inflation. There are some drawbacks to this tax, notably the time and expense involved in collectionand its constrainingimpact on trade, but it has continued to be the mairnstayof the Municipality'sfinances. -98- ANNEX9 Page 4

15. The Municipality's real financial problems lie with the inadequate exploitation of its remaining tax base. The KMC's tax base is narrow, octroi and property taxes accounting for 98% of tax revenues or 78% of total revenues (in 1978/79). Apart from these sources, other revenue sources are provided by rents on KMCproperties, fees and service charges and from grants from the Government for primary education.

16. Property tax assessments are based on rental value while most rental properties are subject to rent controls. No recent re-valuations of properties have been undertaken. There are problems of coordination with the Provincial Taxation and Excise Departments, and there are many exclusions for a variety of reasons, one being a three-year rate holiday for all new properties (although this has ended recently). In recent years, property taxes rose 9.5% annually compared with inflation rates in excess of 14%. In 1979/80, the KMCshare of property tax was raised from 50% to 85% (the balance going to Sind) but the underlying problems remain, and in 1981/82 the property tax will still account for only 10% of KMCrevenues.

KDA Finances

17. The finances of the KDA also deteriorated in the late 1970s with deficits of over Rs 300 million in 1977/78 and 1978/79. The main problems were on the water supply side of its activities, with high development costs but revenues from resale inadequate to meet them. There were also growing arrears in water charges amounting to Rs 450 million by June 1981.

18. Since 1978/79, when the Budget was a little over Rs 500 million, expenditure has increased to Rs 902 million in 1979/80 and Rs 1,121 million in 1980/81. More recently, in 1983, the Water Wing of the KDA has been transferred to the Karachi Water and Sewerage Board, which should help to resolve the financial problems previously experienced in the water supply sector.

19. The main function of KDA is now land development, with land being sold by Government to the Authority at below market rates on a scheme basis. Its charter requires it to undertake operations on a "no profit/no loss" basis, scheme by scheme. Although there have been small overall profits from these operations (mainly on commercial schemes), the breakeven land disposal policy has contributed to the overall financial weakness of the Authority since the land market in recent times has been characterized by rising land values and heavy demand. Hence, KDA is under-exploiting one of its (and the Government of Sind's) major assets. Moreover, the breakeven basis of operation means that the Authority has to borrow to finance its land development operations. The servicing of these debts has in the past led to the diversion of funds from land development activities, or to delays in payments to the Authority's creditors, such as Sind Government. g99 ANNEX 10 Page 1

URBAN ORGANIZATIONAND MANAGEMENTPROPOSALS FOR KARACHI: REPORT OF THE SUB-COMMITTEEON EFFECTIVE CITY ADMINISTRATION,SEPTEMBER 1981

1. In March 1980, the President directed the Ministry of Housing and Works to examine how Karachi's city administrationmight be made more effective. A sub-committeeof experts was set up to examine the existing planning, development,maintenance and management systems, to identify deficiencies in various services and to suggest measures for improving the metropolitanarea's administration. The Sub-Committeesubmitted its report in September 1981 and their findings are currentlyunder review by Govern- ment. 1/

2. In their assessmentof Karachi's existing urban problems, the Sub-Committeeidentify seven major problem sets. These can be summarized as follows:

(1) deficienciesand scarcities in the delivery of urban services to the population (e.g. 30% jpopulationin katchi abadis; only 40% of populationhave direcitwater supply).

(2) socio-economicand geographic inequalitiesin the distribution of urban services (e.g. concentrationof municipal service deficienciesin the katchi abadies).

(3) inefficiencieswithin local government organizations.

(4) taxation base which is to narrow and, particularlywith respect to property tax assessment,unfair in its incidence.

(5) lack of machinery to implement provisionsof Karachi Master Plan and to enforce planning requirementsand standards.

(6) lack of coordinationbetween the various Federal and Provincial Government departments,civic agencies and autonomous bodies operating in Karachi.

(7) constitutional,financial and administrativeweakness of local government (having no constitutionalsupport and a narrow and inelastic tax base).

3. The Sub-Committeeconcludes there to be four main responses required to the solution of the MetropolitanArea's problems:

1/ A Committee under the Chairmanshipof Justice Musrat has also been appointed by the Provincial Government to advise on inter-agencycoor- dination. The Commmittee'sReport has been submitted to the Governor of Sind. -100- ANNEX 10 Page 2

(1) significant financial investments in infrastructure and social services;

(2) a more rational and equitable allocation of functions and resources as between provincial and local government;

(3) the integration of major functions at the metropolitan level and decentralization of minor functions to the local levels;

(4) changes in the systems and procedures of civic organizations.

4. These proposed responses provide the basis for a series of detailed recommendations designed to bring about the more effective organization and management of the metropolitan area.

5. The major institutional changes proposed are as follows:

(1) Karachi Metropolitan Corporation would be granted jurisdiction over the entire metropolitan area. Functioning under KMC as semi-autonomous authorities would be the Karachi Development Authority with responsibilities for land development, housing, planning and building control; and a Water and Sewerage Authority with responsibilities for those sectors from source to consumer, including the collection of service charges.

Part of this proposal dealing with the water supply and sewerage sector has been implemented with the establishment of Karachi Water and Sewerage Board but the other major change of trans- ferring to KMC the role currently fulfilled by Provincial Government in respect of KDA is still under consideration. This proposal would effectively integrate metropolitan development planning, control and implementation with the maintenance functions under one authority. Additionally, KDA would be made responsible for the collection of its own service charges and taxes, and for using any surplus revenues to improve low income areas.

(2) Eight zonal municipalities (ZMC-s) should be established with elected committees, the chairman of which would be ex-officio members of KMC. The ZMC's would also be granted responsibility for local level urban functions (e.g. public health) and have some autonomy in respect of local taxation. This would be supplemented by equalization grants adequate to reduce the per capita revenue disparities between ZMCs.

(3) KMC through KDA would become the planning authority for the Zaatotnent Moards and XIC wou'Ld hba-Te responsibility for the collection of octrot tax. -101- ANNEX 10 Page 3

(4) A number of specific recommendationsare made with the objective of improving the efficiency of existing organizations. These include the introductionof proper accounting procedures, improvementin terms and conditions of employees, examination of organizational/departmentalprocedures and staff training.

(5) Five-year developmentplans should be prepared by KMC for the metropolitanarea and by each of the ZMC's.

6. The Sub-Committeealso make the followingmajor recommendationswith respect to the role of Federal Government in Karachi:

(1) Water supply and sewerage schemes should be financed through the Federal ADP and the expenditure treated as grants, including loans currently outstandingto KDA and KMC. The implicationbeing that water charges would reflect operating and maintenance costs.

(2) Federal Government is recommended to pursue the provision of a mass transit system and improve the existing bus system.

(3) Federal Government should provide KMC with financial aid for the improvement of katchi abadis and for low cost resettlement schemes (plot area development).

and with respect to Provincial Government:

(1) To strengthen and ensure the continuationof local government principallythrough amendments in the law/administrative instruction.

(2) To transfer to KMC the following sources of revenue: entire property tax, betterment tax, capital gains tax, motor vehicle tax, education and professionaltax.

(3) To transfer the primary education function and expenditure incurred to KMC.

7. Because of the current fragmentationof responsibilitiesfor Karachi between the three levels of government, the Sub-Committeerecommends that an Inter-GovernmentalCoordination Council be established. This would have representativesof all three levels of government and be presided over by the Governor of Sind or Chief Minister, with the Mayor as deputy president.

Practicabilityof Implementingthe Sub-Committee'sProposals

8. Several comments can be offered on the Sub-Committee'sproposals for resolving Karachi's administrativeand financial problems.

(1) It is not at all clear whether a significant(Cmassive in the words of the Sub-Committee)infusion of financial investment -102- ANNEX 10 Page 4

would representan appropriateresponse to the existing service delivery deficiencieseven were such funds to be available. There are two principal reasons for suggesting this:

Under the existing revenue sharing arrangementsbetween KMC and the Provincial Government, the proportion of the City's potential revenue base falling within the tax net is significantlybelow its potential level. Some specific examples illustrate the point. Property tax, which was last assessed in 1968/69, accounts for less than 15% percent of the City's total receipts, which is below the figure for almost all the major cities of Southern Asia. It has been estimated by Applied Economics Research Centre, University of Karachi, 1/ that by the mid-1970's the assessment values of all properties in Karachi amounted to under a third of their total market value, while the proportion of all properties not taxed for various reasons was estimated to be as high as 55 percent. In addition, rates and fees charged have, in many cases, not been changed for 15 to 20 years. In the water sector, more than 25 percent of the population pay nothing for their water while the domestic charge for house connections is Rs 2 per month.

The historical division of developmentand maintenance functions between KDA and KMC and the separate budget processes make it difficult to assess the recurring liabilitieswhich the city faces from historical and committed development and infrastructure projects. Until the scale of these total liabilitiesare establishedand related to existing and revenue sources, the capacity to sustain additional major investment cannot be established.

(2) The proposal to grant KMC jurisdictionover the entire metropolitan area represents a most necessary and practicable recommendation. The dissociationof the planning and developmentfunction together with their financial requirements and implicationsfrom those of operation and maintenance is likely to have exacerbatedthe deficiencies,scarcities and inequalitiesof urban service delivery. An integrated authority of the type proposed would allow sectoral priorities to be establishedand projects identified and appraised within the context of an overall municipal developmentplan and budget projection. This process would take due account of the additional recurring cost liability and implicationsfor user charges. The selected programs or projects could then be

1/ City on the Brink, An Analysis of Municipal Finance in Karachi, Hafiz A. Pasha and Azmatullah Khan, Applied Economics Research Centre, University of Karachi, February 1977. -103- ANNEX 10 Page 5

implementedby the respective developmentagency who would also be responsiblefor the collection of the user charges. The advantage of this proposal is that while integratingthe most importantmetropolitan level functions, it would not seriously dilute the existing capabilitiesof either KDA or the newly establishedKarachi Water and Sewerage Board.

(3) The proposed devolution of specific non-metropolitanfunctions and responsibilitiesto the local level is to be welcomed, although its rationale will require detailed study. However, at this stage of the City's institutionaldevelopment a more practicableapproach might be to strengthen the technicaland administrativesupport given to the existing zonal offices by KNC.

There are several reasons for suggesting such caution at the local level. First, it is essential that the proposed institutionaland organizationalchanges at the metropolitanlevel are given time to work. Simultaneouschanges at the local level could complicatematters and deplete the city's limited administrativeand technical human resource base. Second, the proposed metropolitanlevel government changes will themselveshave an impact on the existing problems and appropriate local level solutions, as will the report on provincial taxation submitted to Government at the end of March by the Provincial Taxation Commission.

(4) The Sub-Committee-sproposals to improve the efficiency of the existing metropolitanlevel organizationsare to be welcomed, and should be the subject of specific studies. To be effective, however, these studies will require the definitionof an overall metropolitanplanning, developmentprogram and budgeting process, within which the functionsand responsibilitiesof each organization (principallyKMC, KWSB and KDA) would be made explicit. Specific local level considerationshould be incorporatedin the overall planning and developmentprogram and the responsibilities of individual institutionsat that level identified.

(5) The request that Federal Government provide major financial assistance for water and sewerage schemes, mass transit and the improvementof katchi abadis is unlikely to represent an appropriate response to the existing sectoral deficiencies and scarcities. In addition to the reasons set out in point (1) above, with respect to Karachi's potential revenue base it should be noted that:

- the pursuit of low density new area development policy has exacerbatedthe city's infrastructurerequirements and maintenance liabilities. -104- ANNEX 10 Page 6

- the potential to improve the existing transport system through management/enforcementmeasures and the encouragementof private sector investmenthas not been fully exploited.

- the proposal for a mass transit system, if other than high capacity bus, is likely to exceed the available resource base.

- the city's own attempt to improve katchi abadis has been constrainedby the depletion of KMC's slum improvementprogram in order to cover the city's annual current account deficit, the additionalmain- tenance implicationswhich follow from the new area development policy and the very poor recovery of service costs from the katchi abadis.

(6) The proposed transfer of administrativeresponsibility for taxation from provincial to local government would require detailed considerationof the following issues before such changes could be endorsed:

- rationale for Provincial government to give up certain tax revenues;

- implicationsof the proposed changes on Provincial government finances;

- implicationsof the Provincial Taxation Commission's findings on the proposals;

- financial relationshipbetween federal, provincial and local authoritieswith respect to the collection, sharing and allocation of revenue.

(7) While the establishmentof an Inter-GovernmentalCouncil is proposed to resolve the existing coordinationproblems under the presidency of the Governor or Chief Minister of Sind, it is not evident that this represents the most efficient response to the problem. Such a Council would be unlikely to offer an effective substitute for the definition of specific agency responsibilitiesand inter-agencycommunica- tion. This requirement is particularlynecessary in the area of urban planning and development. ANNEX 11 -105- Page 1

THE SIND BUILDINGS CONTROL ORDINANCE, 1979 1/

SIND ORDINANCE NO. V OF 1979

ORDINANCE to provide for regulation of the planning, construction,control and demolition of buildings and disposal of buildingsand plots in the province of Sind.

WHEREAS it is expedient to regulate the planning, quality preamble of constructionand buildings control, prices charged and publicity made for disposal of buildings and plots by builders and societiesand demolition of dangerous and dilapidatedbuildings in the province of Sind.

1/ Quoted from the Sind Government Gazette, March 3, 1979. -106-

ANNEX 11 Page 2

NOW, THEREFORE, in pursuance of the Proclamationof the fifth day of July, 1977 and the Laws (Continuancein Force) Order, 1977, the Governor of Sind is pleased to make and promulgate the following Ordinance;-

Short title, 1. (1) This Ordinance may be called the Sind Buildings Control commencement Ordinance, 1979. and extent (2) It shall come into force from such date and in such area as Govt. may, by notification,ppecify.

(3) Government may, by notification,exclude any area from the operation of all or any of the provisions of this Ordinance.

Noon-applica-2. Nothing contained in any other law for the time being in tion of a law. force shall apply to any matter regulated by this Ordinance. Definition. 3. In this Ordinance, unless there is anything repugnant to the subject or context;

(a) "architect"means an architect who has been granted a license under Section 8;

(b) "Authority"means an authority appointed under section 4;

(c) "builder"means a person or body of persons, not engaged as mason or such other artisan, engaged in construction of a building on contractor, for hire or sale;

(d) "building"means a building or part thereof constructed or being constructedby a builder in accordance with the provisions of this Ordinance;

(e) "engineer" means an engineer who has been granted a license under section 8;

(f) "Government"means the Government of Sind under this Ordinance;

(g) "prescribed"means prescribed by rules made under this Ordinance; -107-

ANNEX 1 1 Page 3

(h) "Society"means a housing society which has been formed primarilywith the object of providing its members, plots for housing purpose.

(i) "Surveyor"means a surveyor who has been granted a license under section 8.

Appoint- 4. Government may, by notification,appoint any body corporate, ment of local Council or, Governmentfunctionary or organization,to Authority act as Authority for any area, as may be specified in the notification.

Allotment 5. (1) No Society shall sell or make allotment of plots or of sale advertise such rule or allotment without obtaining a 'No of plot:s Objection Certificate'from the Authority in the prescribed manner.

(2) Where the Authority is satisfiedthat the development of the land of the plots, which has been made or is proposed to be made, is below the standard'laiddown by the Authority, it shall refuse to give the No Objection Certificateunder sub section (1).

Approval 6. (1) No building shall be constructedbefore the Authority of plan has, in the prescribedmSLnner, approved the plan of such building and granted no objection certificate for the construction thereof on payment of such fee as may be prescribed;

Provided that in the case of a building the construction whereof has commenced before coming into force of this Ordinance, the Authority's approval of the plan and no objection certificateshall be obtained not later than six months after the enforcementof the Ordinance.

(2) No person shall occupy a building, before the Authority has on application of the occupant or the owner of the building issued occupancy certificate,in such manner, as may be prescribed.

Engagement 7. (1) A plan submitted to the Authority under section 6 shall of be prepared by and under the supervisionof an architect who Architect, shall sign such plan and be responsiblefor any defect therein. Engineer, etc. (2) An engineer shall be engaged for supervisionof -108-

ANNEX 11 Page 4

constructionof a building, other than a sinigleor double storeyed building on an area not exceeding 400 square yards the constructionwhereof may, instead of engineer, be entrusted to the supervisionof a surveyor who shall sign the plan of the building and be responsible for any defect in the construction thereof.

(3) The remunerationpayable to an architect, engineer or surveyor shall be regulated in such manner, as may be prescribed and shall be subject to the maximum limit of six percent of the estimated cost of the building.

Grant of 8. (1) No person or body of persons shall act as architect, license to engineer, or surveyor except with a license granted by the architect, Authority in the prescribed manner; engineer etc. Provided that any license granted under any other law for the time being in force shall expire after six months from the date of the coming into force of this Ordinance.

(2) No license under sub-section (1) shall be granted unless an architect,engineer or surveyor possess qualifications specified in the First Part of the Schedule.

Grant of 9. No builder shall engage in constructionof buildings except license to with a license granted by the Authority in the prescribed builder. manner;

Provided that a builder who is engaged in constructionof buildings before coming into force of this Ordinance, shall obtain the license no later than six months from the commencement thereof.

Fees 10. The fees shall be paid at the rate mentioned in the Second Part of the Schedule for -:

(a) no objection certificate under section 5;

(b) grant of license to an architect,engineer or surveyor under section 8;

ANNEX 11 Page 5

Inspection 11.(1) The Authority may, by notification,authorize one or of build- more officers of suitable qualificationsto inspect buildings ings under under constructionin any locality or localities as may be construc- specified in the notification. tion. (2) If in the opinion of the officer authorizedunder sub-section(1) the consitructionof any building is not in accordancewith the plan or the specificationsapproved by the Authority or any material used in the constructionis of sub- standard or is not of the quality or type mentioned in the advertisementunder section 12, such officer may, by order in writing, issue any direction,and it shall be the responsibility of the builder and all those concerned with the constructionof the building to carry out such direction or he may require that the constructionbe suspended until any further direction is issued either by him or by the Authority, or order that the constructionwhich in his opinion is defective be demolishedat the cost of the builder.

Sale oE 12. (1) No builder shall sell or advertise for sale any buildings. building before he has obtained approval in writing of the Authority, and he shall mention such fact in the advertisement which will further specify all such details about the building as may be prescribed.

(2) The approval granted by the Authority under sub- section (1) shall be displaced at a conspicuousplace in the office of the builder, if any, and at the site of the building.

(3) The builder shall not entertain and register any applicationmade in response to the advertisementunder sub- section (1), if it is in excess of the number of housing units provided in the building.

Increase 13. (1) The sale price of a building advertised under section 12, of sale shall not, after the advertisement,be increased except with the price. approval of the Authority who may, after taking into consideration the rise in cost of building material and wages of the labor and such other expenditure,allow such increase as the Authority deems fit. -110-

ANNEX 11 Page 6

(2) Where a building cannot be completed by the date mentioned in the advertisement, the Authority may on application made in this behalf, extend the period for completion of the building.

(3) WIhere a building has not been completed by the date mentioned in the advertisement and the application under sub- section (2) has been rejected, the builder shall be liable to pay interest at such rate not exceeding the rate charged by a Scheduled Bank and in such manner as may be prescribed, to the buyer of the building, on the amount of the sale price paid by such buyer for the period by which the completion of the building has been delayed.

Dangerous 14. (1) Where the Authority is satisfied that the building is buildings likely to collapse or is so dangerous as to cause harm to human life or property, it may, by notice, require the occupier or occupiers thereof to vacate the building within the period specified in the notice.

(2) If the building in respect of which notice has been issued under sub-section (1) has not been vacated within the period specified in the notice, the Authority may order the occupier or occupiers of the building be ejected, if necessary, by force.

(3) The Authority may, by notice, require the owner of the building vacate under sub section (2) to demolish or cause to be demolished such building within the period specified in the notice and in the event of failure of the owner to do so, the Authority shall have the building demolished and the cost of demolition shall be recovered from the owner as arrears of land revenue.

Interest 15. Where a person has purchased a building on instalments in on unpaid response to the advertisement under section 12, and has failed instalments to pay any instalment in time he shall be liable to pay interest on the amount of the unpaid instalment at such rate not exceeding the rate charged by a Scheduled Bank, as may be prescribed.

Appeal. 16. An appeal from an order under this Ordinance may, in the -escyibed maanneT, be prefe-rredLwithin thirty days of such order to: -1l1-

ANNEX 11 Page 7

(a) Governmentin the case of the order made by the Authority, and

(b) the Authority in other case.

Disposal of 17. An applicationor appeal made under this ordinance shall be application disposed within thirty days of the receipt thereof unless this or appeal. time limit is extended from time to time by Governmenton the request of the Authority.

18. Government may by notificationdelegate any of the powers vested in it or in the Authority to any officer or authority.

Penalty. 19. (1) Whoever has contravenedany provision of this Ordinance shall be punished with simple imprisonmentfor a term not exceeding six months or with fine not less than ten thousand rupees, or with both.

(2) No court shall take cognizanceof an offense under this Ordinance except upon a complaint in writing made by the Authority or any person authorizedby it.

Indemnity. 20. No suit or legal proceedingsshall lie against Government or the Authority or any person in respect of anything done or intended to be done in good faith under this Ordinance.

Power to 21. Governmentmay make rules for the purpose of giving make rules. effect to provisionsof this Ordinance.

SCHEDULE (See Sections 8 and 10)

PART I

(A) QUALIFICATIONSOF ARCHITECTS

(i) Degree in Architecturefrom any recognized institutionor its equivalent plus 2 years experience in ArchitecturalDesigning and supervisionof building constructionOR -112-

ANNEX 11 Page 8

(ii) 5 years Diploma Course in Architecture from recognized institutions plus 5 years experience in ArchitecturalDesigning and supervision of building constructionOR

(iii) 4 years or more full-time college level course in Architecture, the successfulcompletion of which entitles a person to be elected to the National Institute or Association of Architects recognized by the InternationalUnion of Architects plus 3 years experience in ArchitecturalDesigning and supervisionof building construction OR

(iv) 3 years degree in Architecturefrom recognized institutionsplus a minimum experience of 10 years in ArchitecturalDesigning and supervisionof building constructionOR

(v) Degree in Civil Engineering or its equivalent from institutions recognized by the Government plus a minimum experience of 10 years in ArchitecturalDesigning and supervision of building construction. -113-

ANNEX 11 Page 9

(B) QUALIFICATIONSOF ENGINEERS

(i) Degree in Civil Engineeringor its equivalentfrom a recognized Institutionplus 2 years practical experiencein Structural Designing and supervisionof building constructionOR

(ii) 3 years Diploma in Civil Engineering from recognizedInstitution plus 10 years experience in StructuralDesigning and supervision of building construction.

(i) 3 years Diploma in Civil Engineering from recognizedInstitution plus 2 years experiencein designingand supervisionof building constructionOR

(ii) 3 years CertificateCourse in Civil Engineering from recognized Institutionplus 2 years experiencein designingand supervision of building constructionOR

(iii) 2 years CertificateCourse in Civil Engineering from recognized Institutionplus 4 years experience in designingand supervision of building constructionOR

(iv) 1 year CertificateCourse in Civil Engineering from recognized Institutionplus 5 years experiencein designingand supervision of building construction.

PART II

The fees shall be paid along with applicationat the following rates:

(i) No Objection Certificateunder Rs 1000.00 per acre Section 5 of the gross area.

(ii) License to an Architect,Engineer or Surveyor under Section 8 -

(a) Architect'sLicense Rs 250.00 and for renewal Rs 100.00 per annum. -114-

ANNEX 11 Page 10

(b) Engineer's License Rs 250.00 and for renewal Rs 100.00 per annum.

(iii) Building's License Rs 2,500.00 and for renewal Rs 1,000 per annum.

KARACHI: LIEUTENANT GENERAL S.M. ABBASI Dated 1st March 1979 Governor of Sind

MUNAWAR ALI KHAN Secretary to the Government of Sind Law Department -11 5- ANNEX 12 Page 1

KDA ADVERTISEMENTFOR PLOTS

Karachi DevelopmentAuthority Offers 15,000 Plots by Computer Ballot in Shah Latiff Town

Applicationsare Invited from the General Public for Allotment of Plots in Shah Latiff Town (KDA Scheme 25-A)

The size, number and rates of the plots offered for allotment in the above scheme are as under:

PLOTS

60 Sq. Yds. 5,000 Rs SO/-per sq. yd. 80 Sq. Yds. 5,000 Rs 50/-per sq. yd. 120 Sq. Yds. 5,000 Rs 50/-per sq. yd.

Application is required to be submitted in the format given in this advertisement.

Instrujctions

1. The form printed in the newspapers can be used as an application for allotment. Photostat or typed copy of the application form can also be used.

2. The applicationalong with 10% cost of land applied for should be deposited in any authorizedbranch or Banks as listed in this advertisement. No persons/institutionsother than the listed branches of the Banks are authorized to receive applicationsor deposits.

3. The applicantmust obtain receipt of the application duly stamped by the Bank. Receipt without number and stamp of the Bank will not be valid.

4. Only those persons are eligible to apply who do not own a residentialplot or a house or a flat in their ownaname or in the name of their wives/ husbands or dependents in any district town of Pakistan.

5. The list of successful applicants will be drawn by a Computer Ballot through Banks within 3 weeks of the last date of application.

6. The refund for unsuccessfulapplicants will be started by the Bank after one week of the Ballot from the same Branch of the Bank on production of original receipt.

7. The applicationswill be received by the authorizedBranches of the Banks with effect from 10th June, 1981. The last date for receipt of applica- tions will be 28th June, 1981 till close of Banking Hours. -116- ANNEX 12 Page 2

8. The successful applicantswill be required to pay another 40% of the cost of land within 60 days of the declaration of Ballot results. Failure to make payment within this period will result in cancellationof plot. The balance 50% will be payable in two equal annual installments.

Amount payable with this application form:

60 sq. yds. Rs 300/- 80 sq. yds. Rs 400/- 120 sq yds. Rs 600/-

This advertisementis then followed by a list of 150 bank branches. ALlEX 12 -117- Page 3 APPLICATIONFORM

KARACHI DEVELOPMENT AUTHORITY APPLICATION FORM FOR ALLOTMENT OF RESIDENTIALPLOTS

Datei : TO GENERAL PUBLIC BY BALLOT ___

Note: For Bank use only. ; (i) If the particulars required in 1;' B Cod the application or in the Bank Code declaration/affidavit are found r Branch Code

to be incorrect or false, the ______Allotment Order/Lease,if SchemeCode issued/executed shall be liable S_cheme Cod to be cancelled, amount depo- Plot Code sited forfeited and applicant prosecuted. Serial Code (ii) A person is eligible to make J Amount received only one application. Applica- .,.LC . tion in the name of Firms; Corporate bodies etc will not be entertained.

Name of the Scheme A u . Plot Size zs Amountpaidc l,I Shah Latif Town ;2; U. 1. Name (in Block Letters),. 2 Name of Father/ Husband ...... 3 Age. 4. Profession-.- 5. Monthly incomne -- L.-

6 Permanent address - - 7. Presentaddress ------8. Naitional Identity Card ,

No. (if aoplied for.No. f j' i,, - and date of receipt). LW..L l I certify that neither 1,nor my wife!husband nor dependents own a residential plot or house or a flat in any District Town of Pakistan. --- l/vb e, I agreeto abide by all the Rules and v r Regulations made by Government/K.D.A. - ,s from tiimeto time in this behalf.

Signature of Applicant .L -118-- ANNEX 13 Page 1

KATCHI ABADI UPGRADING IN KARACHI 1/

Karachi, the commercial and industrial centre of Pakistan, at present, has a population of over 5 million inhabitantsand an annual population growth rate of 5%, implying an increase of about 250,000 persons or 40,000 families each year. All these people need to be sheltered. Although everywhere in Karachi flats and bungalows are constructedanid housing schemes are developed, many families still do not find an adequate place to live. On the one hand, the number of houses constructedannually is insufficientto satisfy the enormous needs of the city; on the other hand, the houses that are constructedare too expensive for families belonging to low-income groups. The authoritiesconcerned have made various attempts to reduce this housing shortage, through low-cost housing schemes and site-and-services projects. On the whole, these attempts have not been very successful so far, as costs proved to be an insuperableobstacle for the people these projects were intended for.

Katchi Abadis

Families that cannot afford to live in officially sponsored housing projects, eventually resort to a less expensive but unauthorizedsolution: the squatter settlement, in Pakistan called katchi abadi. There they build their houses, step by step according to their resources, but without permis- sion from the authorities;and without a title for the plot they occupy. At present, one third of Karachi's population lives in katchi abadis. Lyari is the oldest and best known area; other areas are Golimar, Baldia Township, Bhutta Village, etc. Since these settlementsare unplanned, they develop in a rather haphazard way -- plots are sometimes very small, streets are narrow and rarely straight and public open space is insufficient. Because of their illegal status, the Government provides these settlements,only reluctantly and piecemeal,with the basic urban infrastructureit normally provides to residentialareas such as: metalled roads, sufficientwater supply, adequate drainage, schools and clinics, etc.

The poor condition of many of the houses and the lack of infrastructure give the settlementsan image of marginalityand dirtiness. They are often thought to be the cancer spots of the city, where people live in the margins of society and antisocial elements dominate. Although, in fact, piecemeal improvementswere undertaken in some areas, the official government policy was: slum clearance, viz, demolition of houses and relocation of inhabitants.

Recently, attitudes towards squatters and squatter settlementshave changed in Pakistan, as well as in the rest of the world. Authoritieshave

1/ Quoted from A Place to Live, prepared by Karachi Metropolitan Corporation and Dutch Advisory Mission to KMC, 1979. -=119- ANNEX 13 Page 2

gradually recognized that people living in these settlementsare not worse than people in any other part of the city. Most of them earn a decent living as laborers,petty traders or servants, but because of their low and often irregularincome, they cannot afford to buy or rent a house and therefore resort to constructionof unauthorizeddwellings on a self-helpbasis. Authoritiesnow also realize that the problem of housing shortage for low-incomegroups can never be solved by demolition of houses which, although illegally constructed,are sometimes of good quality and of value to the residents. Government has come to understand that it should, on the contrary, preserve this housing stock and concentrate its efforts on improvement of these settlements.

Regularizationand ImprovementPolicv

Action to improve living conditions in katchi abadis should be a two-prongedapproach:

- provision of security of tenure to the residents through legalizationof their occupancy (=regularization);

upgradingof overall conditions in the settlement through provision of basic urban infrastructure(=improvement);

It is expected that while security of tenure will be a stimulus to residents to invest more of their savings in their house and its direct surroundings-- thereby improving their individual living conditions-- the provision of basic infrastructurewill improve the environmentalconditions of the settlement as a whole. So, a policy for regularizationand improvementof katchi abadis aims at the creation of legal and environmentalconditions in squatter settlementsby which residents are encouraged to improve their own house and its direct surroundingsso that a permanenthousing stock for low-income groups becomes available.

Financing of Katchi Abadi Improvement

Improvementof all katchi abadis in Karachi, which cover about 10,000 acres and are spreadingat an annual rate of 300 acres, is a gigantic task and requires enormous funds. Besides, there are many other civic tasks that have to be financed from public funds. Therefore, residents of a katchi abadi to be improved are expected to pay at least part of the costs of land and improvement of their area themselves in the form of lease charges for serviced land. In this way, each regularizationand improvementscheme is to a large extent self-financing.

RegularizationProcedure

Before actual planning for a particular katchi abadi starts, it is necessary to examine whether that abadi can be regularizedat all. This depends primarily on location of the land it has been built on and its urban -120- ANNEX 13 Page 3 functionsaccording to the city master plan. Secondary and less decisive factors are related to the settlementproper, such as its size and density.

Simultaneously,ownership of the land on which the abadi has been erected illegally,is to be checked and if the land does not belong to the lease-issuingauthority, negotiationsabout its transfer have to be opened. In order to keep the lease charges within the paying capacity of the residents and to maintain the self-financingnature of the project, land is to be transferredto the lease-issuingauthority free of charge or at most at a nominal amount per square yard. Market value can only be charged in exceptional cases, since excessive acquisitioncosts of land are likely to burden the project budget to such an extent that the self-financingnature of the project and, as a result, the project as a whole are jeopardized.

Physical Planning Procedure

Security of tenure requires long-termleases, but long-term leases freeze the lay-out of the settlementfor a long period. Adaptive planning before regularizationis thereforenecessary. The physical lay-out of the settlementis adapted to facilitate implementationof planned infrastructural improvements. At the same time, possible future demands for additional upgraded infrastructure(as a result of raised standards, increased population density, etc.) are taken into account. So, apart from demarcationof plots on a regularizationplan, physical planners see to it that, where necessary, streets are widened and straightened,space for civic amenities is adequately distributed over the area and requirementsfor present and future infrastructuralimprovements are met.

Concept Plan and Detailed Plans

Basically, physical planning for regularizationand improvementof katchi abadis consists of two steps: preparation of a comprehensiveconcept plan and preparationof detailed regularizationplans. While concept planning relates to the katchi abadi as a whole, for detailed planning the area is usually divided into planning units which, as much as possible, coincide with socio-ethniccommunities (mohallahs,colonies) in the settlement. The comprehensiveconcept plan places the settlementwithin the overall framework of the city master plan and shows proposals regarding major road network, landuse distributionand location of main infrastructuralimprovements.

Preservationof Housing

In view of the aim of the policy to preserve the housing stock of katchi abadis and improve the living conditions of the population,physical planners see to it that demolition of houses or parts thereof is kept to a minimum and that the planned physical lay-out suits the particular requirements of low-income groups. Since area upgrad-ing will. generally be teflected in enhanced property prices, katchi abadis should, as a principle, be planned in such a way that prices of houses and plots in the area remain within the paying capacity of low-incomeresidents. So, physical planners have to find ANNEX 13 Page 4

a balance between present urban standards and future requirementson the one hand, and the necessity to keep property prices in the area within the paying capacity of low-incomegroups on the other hand.

Planning of InfrastructuralWorks

A similar problems is faced by the engineerswho plan infrastructural works for katchi abadis. In almost all katchi abadis of Karachi, the most urgent needs, as expressed by the residents,relate to improvement in water supply, constructionof sewerage system and metalling of roads; so, priority is given to improvementsin these sectors. However, the type of infrastructure to be provided poses a problem, as both the necessity to upgrade the conditionsof the settlement to an acceptableurban level and the paying capacity of the low-incomeresidents have to be taken into account.

With regard to water supply, systems of public water standposts,each serving about 50 households,appear to meet both requirements. While it guaranteesa more or less equal distributionof limited water supply to all households for the time being, it also offers the opportunityto expand the network to include a system of private house connectionsat a later stage. Regarding roads and streets, it is felt that metalling of thoroughfaresis a governmentresponsibility, while pavement of dead-end streets and back-alleys might be left to the initiativeof the people who use them.

Sewerage System

To strike a balance between costs and standard requirements,with regard to the type of sewerage systemato be provided, is one of the most difficultproblems in improvementplanning for katcliiabadis. The way refuse and waste water are disposed of determine to a large extent the hygienic conditionsand thereby the health hazards in the settlement. Hygienic requirementscall for an (expensive)closed water borne sewerage system in katchi abadis, but engineerswho plan the system for refuse and waste water disposal have to take into account that:

- the paying capacity of the residents of katchi abadis is too low for such a system;

- the city of Karachi and especiallythe katchi abadis face a permanent water shortage,which is particularlyacute just before the summer monsoon rains;

- purity ("pak") is highly valued among the populationand cleaning of latrines and drains is usually left to a specializedgroup of persons;

- residentsof katchi abadis, who mainly come from rural areas, are usually unaware of modern requirementsof hygiene. -122- ANNEX 13 Page 5

Therefore,katchi abadis require a sewerage system that meets all the following conditions: it should be inexpensiveand easy to construct, should require little and easy maintenance,should be adapted to local physical and socio-culturalconditions and incrementalimprovement should be possible.

Budgeting a Regularizationand ImprovementProject

Once the design for a suitable infrastructureis completed and an inventoryhas been made of the number, dimensionsand landuse of existing plots in the katchi abadi, economic planners draw up a budget for the regularizationand improvement schemes. They calculate costs of land and infrastructureto be provided and determine lease rates for the plots to be regularizedin such a way that a balanced budget is achieved. While deter- mining lease rates, economistshave to take into account the paying capacity of the residents: a very low paying capacity may curtail the extent of infrastructuralimprovements that can be provided. To keep the lease rates within paying capacity, departmental(planning) overhead costs are not charged to the project budget.

Lease Rates

Residents pay lease charges in accordancewith the size and the type of land use of the plot they occupy. Since it is assumed that low-income families generally occupy smaller plots than high-income families, lease rates per land use category are differentiatedaccording to plot size: occupants of larger plots pay a higher lease rate per square yard than occupants of smaller plots. As an example, the proposed lease rate structure for Baldia Township Regularizationand ImprovementProject is reproduced below (amounts in rupees per sq. yard).

Land Use Plot Size (sq. yds.) 0-80 8-120 121-200 201 and above

Public land 1 1 1 1 Residential land 15 15 25 50 Residential-cum-commercialland 30 30 50 70 Commercial land 100 100 100 100 Industrialland 100 150 150 300

Community Participationand Public Objection

In order to assess paying capacity of the residents, to increase their willingnessto pay lease charges and to obtain their collaborationfor implementationof plans, close contact and an intensive cooperationbetween planners and populationof the area under planning is a necessity. During a reconnaissancesurvey the feasibility of regularizationand improvementof the abadi is assessed, community leaders are identified and tesidentshaave the opportunityto express their needs and priorities. Before actual planning starts, a socio-economicsample survey is conducted in the area to -123- ANNEX 13 Page 6 determine the demographic,socio-cultural and economic characteristicsof the population. In the entire planning process, and in particular during detailed planning, residents of the area concerned are continuouslycon- sulted.

Public participationin planning is formalized through "periods of public objections." During this period of 2-4 weeks (announced in the newspapers)concept plan, lease rates and detailed plans respectivelyare displayed and explained to residents and objections to the proposals are invited. All objections received are discussed in a meeting of the "Public ObjectionsHearing Committee",which in principle is composed of professionr- als from departmentsand government bodies concerned and representativesof the population. This committee decides on the objections raised and once the planners have incorporatedthese decisions in their proposals, the plans are submitted to the government for final approval. As soon as approval is obtained,plan implementationcan start.

Katchi Abadi Regularizationand ImprovementFund

A critical step in plan implementationis the issuing of leases for plots to be regularized,as residents cannot be forced to apply for a lease. Improvementworks are financed from lease proceeds and the works can only be undertaken once sufficient funds from leasing have been received. But as most residents of squatter settlementsstill lack confidence in the inten- tions of the government,they are reluctant to pay regularization-plus- improvementcharges as long as they do not see improvementworks actually carried out. Moreover, residents may be allowed to pay their lease charges in installmentsand consequentlyfunds may be collected over an extended period of time.

To escape from this vicious circle., a Katchi Abadis Regularization and ImprovementFund could be set up, containing a certain amount of seed capital and serving as a revolving fund. From the Fund the improvementworks in a katchi abadi can be finanLced and simultaneous with implementation of the improvement plans plots in the area can be leased out. All proceeds from leasing of plots would be deposited in the Fund and in due time the capital of the Fund would be replenished. This capital could be used again to finance another regularization and improvement scheme. In this way all katchi abadis may be upgraded on self-financing basis. -124- ANNEX 14 Page 1

Inter-DistrictService Differentials

Access to public services is a major component of household welfare, beyond the basic services normally provided by municipalities,such as water supply and sanitationwhich were already discussed; the following paragraphs also concern the provision of education,health, communicationsand other services. Table 14.1 presents data for individualdistricts on educational indicators,health services, communications(telephone lines and post offices), and two general measures of socio-economicdevelopment (television licenses and motor vehicle registrations).

Karachi vs. Rest of Sind. While Karachi's population share (relative to Sind) is 26.9%, it has 36.b7 of the province'sdoctors, 30.9% of hospital beds, 61.8% of non-professionaldegree college teachers, 40.0% of the number of higher educationalcolleges and institutes,84.9% of telephone lines, 81.4% of televisionlicenses and 89.1% of registeredcars. About 40% of Karachi's dwellings have water connectionswhile the average in the rest of Sind is about 14%; the proportion of dwellings served by the central sewerage system in Karachi is estimated at 29% while only a few locations elsewhere in Sind are served by a covered sewerage system. These wide gaps in water and sewerage services exist in spite of the fact that Karachi contains at least 72% of the province'sKatchi Abadi populationwhich has very few basic services. However, these data suggest that some attempts have been made to reduce Karachi's lead in health and educationalservices; it was already mentioned that a major push is currently under way to improve water supply and (to a lesser extent) sewerage in the secondary towns of the province.

District'sOther than Karachi, Although the rest of Sind lags behind Karachi in service provision, there are significantinter-district differenr- tials. Hyderabad is easily the best served district, and in some respects is ahead of Karachi. For example, it has the best provision of educational services outsideKarachi and it has significantlymore doctors and hospital beds per capita than even Karachi. Larkana is also very well served, particularly with health services. With the partial exception of Hyderabad, none of the districts stand well with respect to other socio-economic developmentindicators such as telephones,televisions and motor vehicles.

Table 14.2 examines a wider range of public services such as water supply, sewerage and drainage, electricitysupply, accessibilityand communications,education and health services in urban areas for all districts of Sind (except Karachi). The measure used is the "service ratio", that is, the number of services per 1,000 population. Obviously, such a measure has intrinsicweaknesses, most of them arising from its neglect of size and quality differentials. For example, a district with larger secondary schools would have better educationalservices than its crude number score would suggest. klso, so-meservices are substitutesfor each other, e.g. water connectionsfor drinking wells. Nevertheless, these ratios do shed more light on the availabilityof services among districts. Thatta performs badly -125- ANNEX 14 Page 2 with respect to almost every service. The northern districts of Jacobabad, Sukkur,, Khairpur and Nawabshah stand poorly with respect to water supply. Jacobabad is badly equipped with both education and health services,while Hyderabad's apparently poor performance in health facilitiesmerely reflects the absence of service ratios for major hospitals in Table 14.2 (this aspect was considered in Table 14.1).

Incidence of Katchi Abadis. One of the major factors explaining interarea differentialsin water supply, sewerage, electricityand other basic services is the spatial distributionof Katchi Abadis. Although there is now a nationwide program to regularize tenure in Katchi Abadis and hence to expand basic services there, most of these areas still lack water supply, sewerage and drainage,and electricity. Although Katchi Abadis are heavily concentratedin Karachi, about two-fifths of the households of Hyderabad live in such areas and more than one-half of the Sukkur population are Katchi Abadi residents. This may help to explain the service lag in Sukkur, since this district lacks the historical legacy of an urban infrastructureand public service distributionsystem found in Karachi and Hyderabad.

Conclusion. To sum up, Karachi maintains a big lead over other districtsof Sind in terms of general socioeconomicdevelopment indicators. However, although the capital is better provided with public service than other areas (with rare exceptions,e.g. hospital beds and doctors in Hyderabad), the service gap is not as wide as might have been expected,and within the constraint of very limited resources strenuous efforts are being made to close the gap still further. Nevertheless,among the other districts there remain substantialdifferences in public service levels. If the aim of social policy is to provide equal quality of services to all parts of Sind, there is still substantialscope for implementationof a service equalization strategy.

Urban Size Class and Rural Differentials

From the point of view of an urban developmentstrategy, an interesting question is whether public service provision differs significantlyby size of urban place. For example, if it could be shown that larger urban areas consistentlyprovide more and better services than small, this might suggest two alternativepolicies. If the better provision reflectedmarkedly lower per capita costs in larger towns, the appropriatepolicy response might be to promote the growth of the larger urban areas as a means of minimizing infrastructureand service costs. On the other hand, if per capita costs were invariantwith urban size class, lower levels of public service in smaller towns might merely reflect neglect by the public sector. In this case, the appropriateresponse would be to assign priority to the smaller towns in the future public infrastructureand service policy.

Urban Services in the Secondary Towns. The service ratios of Table 14.3 cover the same categories that were analyzed in the inter-district analysis (once again Karachi is excluded). There is no clear tendency for any one size class to have more services over the full range of services. -126- ANNEX 14 Page 3

Hence, it is necessary to interpret the results by each category of service. Electricityconnection ratios do not vary regularlywith size class. They are uniformly low, but a little lower in the 25,000-50,000class and a little higher in both the 5,000-minus and the 50,000-plus size classes. Water supply services improve up the urban hierarchy,with the obvious qualifica- tion that ratios for wells and hand-pumps vary inverselywith those for house connectionsand communal taps. However, there are more house connections in the 25,000-50,000size class than in those urban centers larger than 50,000.

Consideredas a whole, the service ratios suggest that smaller urban centers in Sind are not severely disadvantagedrelative to the larger centers, though they are worse off with respect to water supply and sewerage and drainage. Thus, there would appear to be no major policy implication that public service provision should be targeted to a specific urban size class. Instead, it would be better to concentrate on narrowing the differentials along districts.

Education. Table 14.4 provides some insights into the level of educationalprovision. Although literacy rates increase markedly with urban size, these might not accurately reflect differences in provision since literate persons may figure disproportionatelyamong migrants to the larger cities especiallyKarachi. School and college enrollments provide a better indicator. These suggest that the level of service improves dramaticallyup to the 50,000 populationsize (even in primary education), but varies little beyond that (with partial exception of college enrollmenits).

Service in Rural Areas. A possible source of concern could be the poor availabilityof services to rural areas. While 77% of the rural popula- tioniare less than three miles from a primary school, many rural households are far away from basic services. For example, 50% of household would have to travel more than nine miles to a rural health center, though a few might be able to locate a doctor at less distance. To give another illustration, 52% of rural households are more than five miles away from a telephone. There is considerablescope for improving rural accessibilityto public services,whether by more investment in roads and communicationfacilities or by a more dispersed public service policy to improve the number of services available in villages.

There is evidence that over the last decade the provincialgovernment has, within the limits imposed by severe fiscal constraints,attempted to correct the imbalancesin public services between urban and rural areas. Before 1974-75, rural areas were completelyneglected, accounting for insig- nificant proportionsof very modest total investmentlevels. From 1974-75, however, the share of rural areas steadily increased,and by 1977-78 they absorbed 53% of the total investment (Karachi and Hyderabad excepted). Although the total sums expended remain relatively small (still only Rs 95 million in 1981-82), the rural areas have benefited both from the expansion in the total program (175% higher in the two years 1980-82 than in 1976-78) and from increasedpriority to rural areas. Table 14.1: SOCIOECONOMTC DEVELOPMEN'T INDICATORS

1972 No. of Doctors Registered Cars, % Enrolled Literacy Rate (%) Doctors per Hospital Beds per Telephone Post Offices T.V. Licences Jeeps, Station Wagons District in Primary Schonis Males Females (1978) 100,000 Beds (1978) 1lO,O Lines (1974) (1974) (1980) (1979)

Jacobabsd 20 26 5 23 2.27 150 14.81 721 39 1,482 255 Sukkur (Shikarpur) 31 38 11 42 2.42 353 20.30 2,723 97 7,210 1,620

Larkana 35 33 8 73 6.40 652 57.19 773 76 3,391 554 Nawabsheh 22 35 9 70 4.28 386 23.58 1,578 136 3,333 985 Khairpur 34 33 7 29 2.96 182 18.55 768 67 1,132 690

Dadu 26 36 10 28 2.61 394 36.69 766 26 2,174 263

Hyderab4d (Badin) 43 35 17 236 8.28 1,611 56.55 6,866 108 27,311 11,214 Sanghar 34 29 9 19 2.06 136 14.75 414 59 2,629 24 Tharparkar 32 22 7 34 2.27 164 10.93 1,469 95 3,043 1,139

Thatta 17 29 7 45 5.94 186 24.57 221 41 805 24

Karachi 70 59 342 6.39 1,885 35.23 91,709 169 229,129 136,957

Sind 41 _ _ 941 4.96 6,100 32.16 108,008 913 281,639 153,637 Table 14.2: SERVICE RATTOS BY DISTRICT

Type of Service Hyderabad Thatta Badin Dadu Khairpur Jacobabad Nawabshah Larkana Sanghar Sukkur Tharparkar Mean

ElectricityConnections 67.80 4.27 53.00 79.47 83.24 '74.53 50-32 75.83 88.28 103.32 37.91 67.44

Water Connections 15.90 12.28 . 9.17 14.64 8.65 5.97 8.92 17.65 25.11 6.95 23.51 14.10

Communal Wells 0.59 0.83 o.63 0.25 0.59 0.55 0.16 1.27 1.75 0.21 0.35 o.62

Drinking Wells o.60 0.09 0.41 2.22 0.92 i.64 1.22 1.45 o.o4 0.42 0.75 0.81

Hand Pumps 38.96 0.92 32.81 10.19 85.51 49.oo 36.03 34.25 14.59 138.46 2.36 44.58

Road Mileage 0.38 0.20 o.47 0.0g 0.19 0.35 o.4s 0.28 o.s6 0.31 o.67 0.39

Telephone 4.57 3.73 4.79 7.00 4.83 4.68 5.69 3.88 6.27 10.0o4 5.81 5.95

Primary School 0.36 o.40 o.47 0.35 1.18 0.25 0.34 0.37 0.61 o.66 o.67 o.s4

Secondary School 0.18 0.19 0.25 0.19 0.18 0,13 0.19 0.20 0.28 0.39 0.25 0.23

Civil Dispensary 0.04 o.,4 o.66 o.o6 0.05 0.06 0.06 o.o6 0.50 o.84 o.o6 0.25

Maternity Home 0.04 0.02 0.08 0.05 o.o4 0.05 0.0o o.o6 0.10 0.04 0.09 o.o6

Rural llealth Center o.o4 o.o6 0.11 0.03 0.05 0.02 0.01 0.03 0.02 0.02 o.o4 o.o4

Drannage (Pucca covered) 3.33 2.50 16.87 7.44 7.72 8.33 1.25 0.0o 0.0o 4.68 17.81 6.32 F

Drainage (Pucca open) 53.75 14.37 26.25 25.44 31.82 30.83 34-37 65.oo 43-79 16.53 28.44 33.24 0

Drainage (Katcha) 4.16 55.87 10.00 17.11 2.27 5.00 13.37 5.71 13.21 11.56 22.18 14.35

Source: S. Akhter, Settlementllierarchy in Sind Province (Applied Economics Research Center, University of Karachi, Research Report 9, April 1978). Table 14.3: SERVICE RATIOS BY URBAN SIZE CLASS

Type of Service Less than 5,000 5-10,000 10-25,000 25-50,000 More than 50,000 Electricity Connections 71.19 68.73 64.41 61.14 74.05 Water Connections 2.25 14.62 13.81 33.38 18.32 Communal Taps 0.59 0.52 0.53 1.29 1.33 Drinking Wells 0.50 1.01 0.81 0.45 0.05 Hand Pumps 90.92 37.81 39.17 17.28 15.40 Road Mileage 0.71 0.32 0.32 0.36 0.40 Telephone 10.65 4.98 4.59 7.59 5.49 Drainage (Pucca covered) 0.00 5.43 7.14 15.87 28.33 Drainage (Pucca open) 17.26 36.41 33.14 40.00 56.00 Drainage (Katcha) 14.10 14.88 13.89 18.50 0.00

Source; S. Akhter, Settlement Hierarchy in Sind Province (Applied Economics Research Center, University of Karachi, Research Report 9, April 1978). -130-

Table 14.4: LITERACY RATES AND ENROLLMENTSBY SIZE OF PLACE

Enrollments (%)

Size Class Literacy Rate (%) Primary SecondaryColl

5,000-10,000 45.5 32.1 27.6 10.2

10,000-50,000 33.6 41.3 40.2 18.3

50,000-100,000 59.8 65.7 53.2 21.6

100,000-1 million 70.0 62.7 49.3 23.7

Karachi 73.3 64.0 57.8 26.1

All Urban 63.1 58.9 51.2 24.4

Source: Sind Regional Plan Organization, Social Aspects of Sind (November 1980). -131- ANNEX15 Page I

SIND

URBANSECTOR REVIEW

List of Source Documents

RPO 'Publications

Background - Urban Sector Study of Sind HlistoricalBackground Publications of the Economic Studies Center Regional Development Strategy for Sind Province, Basic Considerations Investment in Private Sector in Five Selected Town of Sind 1976-81 Investment in Public Sector, Sukkur Division 1976-81 Sind RPO Act Pakistani Emigration - Cost Benefit Analysis iousing and Population Censuses 1980-81, 5 Volumes Industrial Potential Survey of Sind, Khairpur - Volume VI Alternative Choice of Industrial Strategies in Sind, Mr. Abassi Demographic Aspects of Sind, RPO, December 1979 Social Aspects of Sind, RPO, November 1980 Urbanization in Sind Hierachy of Urban Settlements in Sind - June 1981 Population Growth Rates of Municipal/Town Committees and Corporations of Sind Socio Economic Characteristics of Women in Sind Regional Development in Sind - Volume I Book 2 Present Situation

Sind Government Publications

Budget Speech Budget at a Glance A.nnual Development Program, 1981-82 Annual Budget Statement, 1981-82 Economic Analysis of the Sind Budget

Development Statistics of Sind, 1979 Survey of Urban Settlements - Questionnaire

Small Industries Development Plan, 1981-84 List of Industries Permitted to Establish in Karachi Establishments and Employment in Sind Local Government System in Sind

Socio-Economic Survey of Eidguh Colony, Hyderabad -132- ANNEX 15 Page 2

Town Planning Department, Hyderabad - Organization Functions and Bottlenecks Survey and Mapping of 20 Small Towns in Sind Working Paper on Outline Development Plans for Expanding Towns of Sind Housing Program for District HQs.

Public Health Department - Piped Water Supply Coverage in Sind Sewerage Coverage in Sind

Development Projects of Local Councils in Sind - 1978-1980

KDA Publications

Review of Projects - 1978-82 Budget 1981-82 (highlights) Budget Estimates 1981-82 PCI Form for Shah Latif Town Annual Accounts of Development Wing, 1977-78 Portfolio of Aid Worthy Projects, 1981 Planning and Development Problems of Karachi, 1979 Urbanization - A Challenge to the Third World, Z.A. Nizami

KMC Publications

Highlights of KMC Budget, 1981-82 Budget in Brief 1981-82 An Overview of KMC's Budget 1981-82 Explanatory Memorandum 1981-82 Disposal of Business Order, July 1980

Applied Economics Research Center Publications

Cost Benefit Analysis of Regularization and Improvement of Katchi Abadis in Karachi, 1980. Incentives to Encourage Establishment of Industries in Ten Developed Areas, a Case Study of Hub Chowk, 1980. Settlement Hierarchy in Sind Province Long Term Forecast of Industrial and Manpower Growth in Key Industries in Sind and Baluchistan. -133- ANNEX15 Page 3

KESC Publications

Tariff Schedule Actual and Projected Financial Statements, 1978-1992 (April 1982) PC 1 Proforma for Extension of PIPRI 200 MWUnit 2 (August 1980)

Miscellaneous

Sind Government and Karachi CiLty Finances, World Bank 1979 Report of the SubCommittee on Effective City Administration Government and Growth in Karachi Karachi Export Processing Zone - Descriptive Brochure Minutes of Meeting - December 31, 1981 Karachi Water Management Board Ordinance Pakistan - Urban Sector Survey, World Bank, 1976

KARACHI

1. Karachi, the major commercial center of Pakistan, has a population of over 5.0 million and is growing at 300,000 people/year. The center has an emerging modern downtown. However, the periphery is growing in an often unplanned and informal manner.

2. By contrast, parts of the city still operate in a traditional fashion. 4%4, ~~~~~~Waterbuffalo are worked and the city's laundry are handled side by side on the Lyari river banks.

3. A detailed view of the traditional laundry activities handled in

thein central Lyari neighborhood Karachi KARACHI

4. A large part of the housing has emerged on the periphery of the city in an informal manner often with minimal planning and infrastructure provision by gove-rnment.

5. The process of housing settlement on periphery of Karachi can be observed here. In the foreground the first stages of a low income informal settlement or Katchi Abadi: on the hillside later stages of housing consolidation.

6. In the foreground is one of Karachi's earliest sites and services projects, Metroville I. The concept ~~Wg was sound, the location T, VW ~~~~~~~rightbut the allocation process encouraged investment objectives rather than owner user development. KARACHI 7. Housing and suitable sites are in such great demand S.94w''- &rb' ;' ' W-4t ''g>-, that squatters have developed makeshift housing on flood prone areas of the Lyari river in central Karachi.

-. New satellite settlements .~. ~ t - ,- 3 -.-- j.- >-> -- K%>were planned as mechanisms for managing the growth of '44 -od tf ,- Theset -nKarachi. often did not evolve as fully socially and economically

',_I' '"integrated settlements.

-~~~~~~~~~~~~~~~1WiW 4z t SUKKUR

9. One of Sind's northern most cities with a population of about 340,000 built along the Indus and around an extensive irrigation network.

<~ k 10. The city has an active development program and the center of the

_ ~~~~~~~~~~~~cityis high density multi-storey buildings of reinforced concrete and brick.

1~~ I -4 ~~11. Building activity is 0 ~~~~~~apparentin many areas of the city as additional floors and rooms are added to existing -,,-Z ~~~~~buildings. SUKKUR 12. In addition to the more substantial buildings in the city center,settlements have developed along the river front with rudimentary toilet and washing facilities.

13. In vacant pockets g ~~~~throughoutthe city 60 ~~~~~~~~~~lowincomeKatchi Abadi's have emerged with minimal services.

14. Suitable housing is in such short supply that people have built houses on boats in the river. 15. JAKOBABADAND THATTA

Jakobabad (15 & 16) and Thatta (17) are examples of the smaller towns which are dispersed throughout the province. There are seven towns with populations.over 50,000; 14 towns with populations of 25-50,000 and 95 towns below 25,000. Jakobabad is over 50,000 and Thatta, an historic city, is under

16.

17. IBRD 16535R j72° 7T6 SEPTEMBER1983 PAKISTAN U. S. S. R. KARACHI/SIND URBAN SECTORREVIEW C H I N A

CITIES WITH MORE THAN 100,000 POPULATION - .- Citiesby number residents, 1981: _- 7'" 5,100, 000

3,000,000 36'

1,000,000 500,000 ) 100,000

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IBRD 16536R U S. S R. r CHINA P A K I S T A N I SEPTEMBER1983 r~-z-.' 9,- KARACHI/SIND URBAN SECTORREVIEW fr fA { { ,{Pe/°DISTRICTS AND MAJOR TOWNS IN SIND ( StS ttn'> Citiesand towns by numberof residents,1981: Annual growthrates, Roads iA-GHANISTAN 5,100,000 1972-81: - Railways AFGHANISTAN lsmao2G /\ z >tIsI JA, S - \' 3000000 LZ Lessthan 4% - Canals L a ~~~~~~~~~~~~~~~~~300004% -50/ =ztRivers

'PAKIST'Ere %z; / tX \ SOQOOi,00 More than 5% ---- District boundaries \ A-Uh 100,000 - -Provincial boundaries

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