In order to achieve the perceived benefits of economic regulation of urban water services in Sub-Saharan Africa, and subject to conducive and appropriate political and socio-economic environment, the more appropriate institutional arrangements is an autonomous regulatory agency. The autonomy of the regulatory agency will be enhanced if it has its own legal status, and is able to develop, manage and control its own budget financed from a regulatory fee charged on the regulated water providers. Governments should be willing to relinquish regulatory decision making powers to this non-political and non-governmental body. The reporting and appointing mechanisms for the board could also have an influence on the autonomy of the regulator. Economic regulation of urban water services is a necessary but perhaps not sufficient condition for efficient and effective delivery of urban water services. It is not a panacea to the enormous problems of urban water services but can play a very effective role