Participatory poverty assessments undertaken in urban contexts in developing countries indicate that the urban poor suffer from a wide range of interlinked problems relating to low income, poor health, illiteracy, insanitary physical conditions, disempowerment and so on. Poverty interventions have, increasingly, attempted to address this interlinked nature. The experience of various environmental improvement projects has proved that the benefits of water, sanitation, drainage and solid waste programmes, for instance, are maximised by conducting these improvements within an integrated programme. Improving services on their own often creates unsustainable interventions,5 but improving services at the same time as empowering communities and individuals, increasing income-earning opportunities, facilitating credit, promoting hygiene and health, and/or underpinning education activities empowers communities to access the environmental improvements.
Seen in the context of poverty reduction processes, one of the primary problems caused by sectoral private sector participation in service delivery is that it puts aside the lessons that have been learnt about integrated poverty reduction responses, tertiary level infrastructure interventions, and the need to address the multidimensional problems of poverty in an integrated way.
Yet experience in PPPs to date has done little to acknowledge this experience. One of the important implications of the private sector taking over water and sanitation delivery particularly, is that this ringfencing process removes an important aspect of the multisectoral approach to poverty reduction - the money. While community development may be at the heart of participatory approaches to poverty reduction, and income generation activities promote sustainability, infrastructure development has often provided the financial foundation - the springboard - for other activities. Once the delivery of infrastructure and services has been isolated through a PPP, convergence of poverty reduction activities has rarely been established.
Whereas the single-sector approach proceeds with a solution pertaining to one sector (water and sanitation, solid waste or electricity) and creates linkages within that sector (e.g., between middle-income and low-income areas, subsidies, etc.), the multisectoral approach to poverty reduction creates linkages around the poor's needs (e.g., water supply, health promotion, housing upgrades, income generation, community development). In some rare cases, non-physical interventions such as hygiene promotion, community development and credit facilities have been taken on by the private operator and a degree of synergy achieved around sustainable service delivery. Such was the case in El Alto, where the operator agreed to participate in a pilot scheme that would rapidly increase the number of households connected to the network (see Box 7.6). In this case, the operator saw the benefit of community participation and hygiene promotion, as these would increase the ability of households and communities to make use of the water and sanitation services. It also recognised and responded to the poor's need for financial support to fund the costs of connections and in-house installations.
While evidence tells us that urban poverty reduction is more effective when an integrated approach is adopted - i.e., that purely physical improvements are often unsustainable in low-income communities - evidence also suggests that private sector participation in urban infrastructure improvements can be more effective because a range of efficiencies and benefits can be brought to bear to produce broader and more immediate improvements. Yet it is also likely that private sector participation can reduce the scope for direct multisectoral poverty reduction initiatives. In order to maximise the integration of poverty responses when a private operator is involved, municipalities must therefore ensure that the formulation and management of a service delivery partnership is carried out in the context of other linked poverty responses. They have a responsibility to facilitate integration and to work with all partners to nominate the stakeholder that is most able to perform a specific role. In order to focus partnerships on the poor, municipal decision-makers must perform a coordinating role ensuring that, at the strategic, planning and implementation levels, the activities of PPP service delivery are linked into other activities.