Small town water supply and sanitation mirror challenges of the water sector, but are not prioritized by central government and development partners. Small towns have limited water sources and inadequate distribution networks. Water shortages in small towns complicate identification of the poor because there are many unconnected non poor residents. Mpwapwa and Nzega water utilities have a kiosk strategy to the poor and unconnected but target the poor differently. The Mpwapwa utility gives free water to poor people; Nzega utility has no free water strategy; though the utility is performing better. Small town utilities have limited capacity to run operations; and the Nzega utility contracted a private company to manage and distribute water in the town. Households have limited incomes to finance water connections and small town utilities require one-time connection fees that are too high in addition to pipes and pipefitting equipment. Alternative service providers supply water to unconnected, charge higher tariffs and are not regulated by the main utility. Sanitation is predominantly pit latrines and septic tanks; which pose contamination problems for shallows wells.