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There are serious institutional challenges associated with low-cost sanitation in deprived urban communities. These include a collective action challenge, a coproduction challenge, a challenge of affordability versus acceptability, and a challenge related to housing tenure. This paper examines these challenges, revealing both the importance of community-driven sanitation improvement and its difficulties. The nature of the challenges, and the means by which two successful community-driven initiatives have overcome them, suggest that while recognizing the human right to sanitation is important this should not be taken to imply that typical rights-based approaches are the appropriate means of realizing this right.