A crisis in urban governance

The recent report that Bangladesh's twelve city corporations operate on a collective annual budget of just Tk 230 billion, an amount that severely constrains their capacity, stands as a damning indictment of the nation's urban governance crisis. This figure is astonishingly low for entities that host more than half of the country's economic activity. It is plain to see that Bangladesh's economic lifeblood flows through its cities, yet these very engines of growth are being deprived of the resources they need to function effectively. This chronic underfunding carries a massive macroeconomic cost. According to estimates by the Policy Research Institute of Bangladesh (PRI), economic inefficiencies stemming from poor planning, weak coordination and misallocation of resources are costing the economy 6 to 10 per cent of GDP each year. The PRI report also highlights a critical failure in municipal revenue collection, noting that property and transfer taxes in Dhaka and Chattogram contribute a mere 0.13 per cent and 0.06 per cent of GDP, respectively. For cities of such scale and economic importance, this contribution is undeniably negligible.
While revenues remain meagre, the cities themselves continue to expand rapidly, yet their capacity to generate jobs is steadily shrinking. Urban employment growth dropped from 4.0 per cent between 2010 and 2017 to just 0.8 per cent thereafter, with industrial employment even slipping into negative territory. This exodus of industrial jobs from urban centres suggests cities are struggling to provide a business-friendly environment. The decline in job creation is particularly troubling given that the urban population already nears 40 per cent of the national total and is projected to reach 50 per cent by 2030. This relentless growth places ever-greater demand on city services. The strain is most severe in Dhaka, where an extreme concentration of people and economic activity has worsened both inequality and inefficiency. Daily life is hampered by congestion, pollution, overburdened utilities and traffic gridlock, leaving residents to navigate a city that often seems unfit for its own size. Much of this could have been avoided with proper urban planning. However, policy has been largely reactive rather than proactive, perpetually trying to catch up with problems instead of guiding urban growth in an orderly and sustainable manner.
Even as the pressures on Dhaka mount, the city's immense pull makes citizens, businesses and government institutions reluctant to move elsewhere. Meanwhile, a city with natural advantages like Chattogram, home to the nation's critical port, remains drastically underdeveloped relative to its potential. Similarly, industrial hubs like Gazipur produce significant goods, yet the workers who fuel this production are often left to live in squalid conditions with limited access to safe water, proper sanitation and quality schools. This is not a sustainable path for development.
The current trajectory of uneven urban growth and weak local funding cannot continue if Bangladesh hopes to sustain development and raise living standards. Achieving this requires effective city management, which in turn depends on specialised expertise, strong local governance and active citizen participation. City corporations in their present form remain hamstrung. They are entrusted with monumental responsibilities but are granted limited power, unable to collect taxes effectively and forced to rely on insufficient central funds. Expecting much from them is futile unless they receive real capacity and adequate resources to operate transparently and responsibly. Under the circumstances, the only way forward is to strengthen city corporations and invest properly in cities rather than allowing expansion to proceed unchecked.