Comparing Informal Sector Engagement Across Pakistan’s Largest Urban Centers: Lessons in State and Non-state Engagement from Karachi and Lahore

Abstract

Pakistan’s expanding urban informal sector (IS) continues to overwhelm the country’s largest municipal centers. In the light of national policy failures, this study investigates inter-provincial differences in the political will and administrative capacity to engage the IS. The policy contexts of housing, labor, water and sanitation, and transportation—all service delivery—are compared for the cities of Lahore and Karachi to examine the relationship between state and non-state actors in engaging the IS. Cross-municipal data analysis and key informant interviews provide comparative evidence about policy and program outcomes of IS engagement in the two megacities. Evidence supports the current understanding that lower tiers of the state (i.e., municipal governments) are better placed than upper tiers of the state (national and provincial governments) to engage with the IS. The service delivery capability of large municipal corporations is constrained by policy formalism, mal-governance, interdepartmental conflict, and political interference linked to the interests of elite actors at the upper tiers of the state. Civil society engagement in informal settlements, especially in partnership with municipal actors, is the most successful form of service delivery. Moreover, evidence from low-cost, incremental, and “one window” service delivery solutions highlights the benefits of civil society–municipal government cooperation in holding upper tier administrators and ill-conceived policies in check. These research findings build on the critique of “top-down” policy development thinking by confirming that investment in basic service delivery at the municipal level will generate the highest returns in human development outcomes.