At their core, the Millennium Development Goals are all about bringing the vast majority of the world’s population out of a poverty trap that robs them of their health, dignity and aspirations for fulfilling their human potential. While poverty is the underlying theme of all Millennium Development Goals, water and sanitation provide a strategic entry point for action in battling poverty and achieving these goals. Human settlements provide a concrete context for this action. The struggle for achieving the Millennium Development Goal and related targets for water and sanitation are being waged in our cities, towns and villages, where water is consumed and wastes generated. Here is where the actions have to be coordinated and managed. It is at this level that policy initiatives become an operational reality and an eminently political affair: conflicts have to be resolved and consensus found among competing interests and parties. As this publication highlights, by the year 2000, around a quarter of the world’s population, nearly 1.5 billion people, lived in small urban centres, with less than half a million inhabitants. Characterized by rapid unplanned growth, high concentration of low-income population, run-down and often non-existent basic infrastructure, most of these small urban areas serve as market centres for their rural hinterland, strengthening rural–urban linkages and contributing to national economy. Often located on trading routes, these small urban centres experience huge population influxes during the day. Local authorities have little capacity to manage these influxes and their effect on urban service provision.