Extending Services to the Urban Poor

Traditional monopoly service providers have often ignored the needs of poor urban households, perceiving them as customers who are costly to serve and unable to pay their bills. However, the unique and differentiated service demands of poor households often can not be met through standard one-size-fits-all approaches. Understanding these unique needs requires the participation of users in the design, management, and regulation of services. When standards are too rigid or set too high, water supply and sanitation (WSS) services may become inaccessible or unaffordable to the urban poor. Experience shows that where a range of options is offered and adapted to suite these niche markets directly: through utilities or by alternative means such as small scale providers, the poor have benefited.

Over the next two decades, the world's population balance in all regions will tip towards urban areas. By 2020, 50 percent of the developing world’s population will be urban centers, most will live in small and medium-sized towns, and many will be low income households. These markets account for the bulk of the unserved urban population and are therefore the primary targets of the Millennium Challenge (62k pdf). However, reaching these markets is a complex task that must take into account a wide range of factors such as informal settlement or slum upgrading policy; the trend towards decentralization of service delivery and fiscal responsibility; ineffective pricing and subsidy policies; and inappropriate technical and service standards, which are among the key stumbling blocks for monopoly service providers responsible for serving these markets.  

In addressing urban poverty, the World Bank Group’s knowledge work and lending activities are therefore focusing on strengthening the knowledge and capacity of national and local governments to conduct demand assessments and improve poverty mapping; establish appropriate tariffs, targeted subsidies, and incentives for reaching the poor; promote better hygiene and sanitation; and reform policies, regulations, and standards in favor of the poor.