A Sourcebook - UN-Water

4.3 Informal Service Provision
In most developing countries, formal service providers do not serve the whole population, even within
urban areas. Where this is the case, the remainder of the population—those who are “unserved”
by the utility—must get their water elsewhere. The alternatives are either self-provision (for example
through collecting rainwater or water from streams), or private, informal water vendors. Informal providers
can include water tankers, water carriers, or privately provided standpipes. These alternatives
are, in some cases, also used by connected customers to complement unsatisfactory service by the
formal utility.
The cost of informal provision is, in general, higher than well organized formal provision through a
piped network (at least in densely populated areas). A high level of informal supply therefore indicates,
at best, failure on the part of the formal service provision system. This failure may have its roots in
poor governance.
High levels of informal provision may also indicate something much more pernicious—a deliberate
sabotage of the formal system by government officials who can profit from involvement in the informal
system. In some cases, those with power over the formal utility engineer its failure, in order to create
scarcity that informal service providers can fill.
These informal service providers often use public resources. For instance, private water tankers may
get free or low cost water from the public network. Public officials may cooperate with gangs to cartelize
the informal service provision. This creates a supply of rents, part of which is passed back to the
public officials who sabotaged the public water supply, encouraging a continuation of this arrangement.
Plummer (2007) summarizes the relationship between informal service provision and corruption in a
case study from an urban slum in Latin America:
In a steep hillside squatter settlement in Latin America, poor households have waited for utility
water for decades. With little confidence that the local council would extend the network,
most communities opted for water provided by informal service providers, who stole or bought
the utility water and delivered it in tankers. The price varies substantially as the providers were
susceptible to the demands of the municipal water officials, paying them for the water they
used and periodic silence payments. When one of these officials came to the squatter settlement
and saw a huge new market, he decided to begin delivering water to the settlement
himself—moonlighting at night using a utility tanker. He sold water at the same price as the local
private provider, and in developing such a lucrative personal business, he made no further
recommendations that the network be extended. 7
Where informal providers supply a substantial part of the market, and where this situation appears to
be entrenched, sector practitioners need to be mindful that corruption may be part of the cause. Indicators
of corruption based on informal provision include:
• High levels of informal service provision. Indirect evidence of this is provided by measures of the
utility’s water and sanitation coverage (see Table 4.1). If coverage is low, it is probable that informal
providers are filling this gap
• Cartelization of informal service provision. For example the following factors may indicate
cartelization:
7
Plummer, J. (2007). “Making Anti-Corruption Approaches Work for the Poor: Issues for Consideration in the Development
of Pro-poor Anti-corruption Strategies in Water Services and Irrigation”. Swedish Water House Report No. 22
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