For people living in rural areas, in villages, secondary towns and on the periphery or in poor neighbourhoods of large cities, access to water and sanitation requires political decentralisation as well as decentralisation of financial resources, human resources and of management tools. Indeed, the required contributions, management and regulatory skills can be better mobilised closer to the ground. In most countries, water supply services are the responsibility of local authorities, or else of regional and/or autonomous branches of central government.

While political decentralisation involves national, regional and local elected representatives, decentralisation of financial resources is much more complex, as these resources come through three distinct channels, which are not always coordinated:

- Local financing through fees and local taxes,

- National financing with transfers, subsidies or guarantees for local authorities, but also with more strategic mechanisms, such as providing frameworks for price setting and structuring or soliciting the financial market,

- International financing through aid, with its specific constraints.

It is clear that today, local stakeholders find it difficult to access the financial resources they need to develop water supply services: the political and institutional framework for financial decentralisation is still incomplete; international cooperation instruments do not focus on regional authorities or non-state actors; banking instruments do not target local authorities or operators, which are small and whose financial credibility is still fragile and; the loans that are available, are too expensive or short term.

Therefore, we need to take a different course of action:

- By recognising the legitimacy of local authorities and their ability to manage public services; in some cases, this also involves capacity building so that they can assume their roles,

- By recognising the fundamental role of national institutions in the local authorities’ capacity to finance the infrastructure they need to meet the water needs of their constituents,

- By setting up innovative mechanisms to provide access to local, national and international financial resources that are more direct, easier to obtain and to manage, and better coordinated,

- By participating in the emergence of a local economy based on local know-how and by strengthening it if necessary,

- By creating platforms for dialogue that take into account local, national and international dimensions.

Interesting experiments have been led over the past ten years, through decentralised cooperation or the support of non-state actors, through local management support programmes or the Water Trust Fund for local authorities’ projects. Other countries are setting up a legal and operational framework that enables local authorities and operators to have regular and reliable access to subsidies or preferential loans. In some cases, pooling mechanisms have enabled small local authorities to borrow under reasonable conditions.

Target 4 aims to promote the development of such mechanisms so that local stakeholders can have access to the financial resources they need.

The different elements involved in Target 4 include:

- Mechanisms that actually correspond to the needs of local stakeholders in water supply service provision: local authorities, public and private operators, the community,

- Systems of loans, but also donations, subsidies and transfers from national institutions, the private sector and international cooperation,

- The participation of all water service provision stakeholders in these mechanisms,

- The enabling and regulatory role of the State, without which access to these types of financial mechanism is often impossible for local stakeholders.