For example, where a private company has been contracted to supply water to a high income residential area, charges raised in that area may, in addition to meeting the basic costs of the service, include a small proportion to be used in support of subsidizing low income areas whose residents cannot afford the real cost of water provision. Privatization initiatives by informal sector entrepreneurs should be encouraged and supported by local authorities. The latter should take advantage of the former in order to increase access to basic services. This could start by recognition of the many current private operators in waste collection and disposal, for example. In implementing privatization, there should also be recognition of self-help initiatives, partnerships, community based organizations and other associations, which have proved capable of providing services to themselves e.g in the area of water supply, garbage collection and transport services.
Decentralization is a necessary framework for privatization.
It entails giving decision-making power with corresponding financial resources to the local level. Decentralization should be encouraged as a way of dealing with the expansion of municipal services.