Utility Services to the Urban Poor

Most governments consider the goal of ensuring household access to networked water supply and sanitation (WSS) services an important priority. Granting monopoly status to utilities has often been used as a means of ensuring that these services are provided at a reasonable cost. However, for a variety of reasons, many utilities are unable to meet their service obligations and provide a poor quality service to all customers, including the poor. The poor suffer first, and most, from the effects of poor utility performance. During shortages, rationing of water affects the poor adversely as their storage facilities are either nonexistent or inadequate. Utilities that are not financially viable find it difficult to extend service to new areas, particularly the peri-urban areas, where the poor live.  

A well functioning utility is essential to realizing sustained improvements in urban WSS services for the poor. However, achieving this objective may not be sufficient to ensure that the poor are served. Meeting the unique and differentiated needs of the poor requires that utilities devise specific strategies and diversify the range of service levels they offer to their customers. Network services may not reach poor communities because of land tenure and even then may not be well suited to their needs. In many countries, poor households are paying for nonconventional solutions because they provide a reliable and quality service at a price they can afford.  Poor households may earn a daily wage and not be able to pay monthly bills, or may desire more water than can be supplied through public standpipes.  

In designing utility reforms to benefit the poor, it may be necessary to segment the market more carefully.  Understanding customer preferences and household economics is an essential starting point, but the involvement of customers in determining appropriate levels and providers of service is essential. Better poverty mapping, baseline surveys, and willingness to pay studies, must be complemented by an analysis of appropriate institutional options including linkages with other providers (e.g., contracts with small scale providers). Partnerships with civil society can play an important role in generating good information, developing a dialogue, and regulating performance.