Questions & Answers about Mamlaka iko mjini.
Because this sentence is about location, not identity.
- ni is used for saying what something is:
Mamlaka ni taasisi = The authority is an institution - iko is used for saying where something is located:
Mamlaka iko mjini = The authority is in town / in the city
So here iko is the correct choice.
Here, iko means something like is located, is there, or simply is in a locational sense.
It is not just a random word for is. It is the form used with this noun’s agreement pattern when you talk about location.
So a good learner-friendly way to understand iko here is:
iko = is located / is present