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During the last five years, World Bank lending for water and urban development has expanded rapidly and the nature of sector work and the composition of lending operations have undergone a dramatic change. This transformation of the Bank's urban activities represents, on the whole, an appropriate response to the long term challenges of unabated urbanization - aggravated by the economic difficulties of the 1980s - and to the lessons learnt from earlier basic needs oriented water and urban projects. In line with the changed economic conditions and the Bank's support of structural adjustment programs, the regional work programs seek to forge a closer link between traditional urban concerns and the macroeconomic investment and policy framework. Thus, greater emphasis is being placed on country strategy formulation and on integrated planning and programming of all activities in each country. Following a brief introduction, the report provides a review of sectoral issues and problems in chapter 2, and an assessment of the effectiveness of the Bank's response to sectoral and subsectoral issues and special problems in chapter 3. Lastly, in chapter 4 the report summarizes the lessons from the past and highlights the challenges for the future.
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