Although the South African government has, since democratic transition, made considerable progress in providing water and sanitation, there are still many challenges, particularly in slum settlements where many residents lack access to clean water and safe sanitation. The country could experience serious social problems unless new policy and planning measures can be put in place, at both the national and local government levels, to address water and sanitation inadequacies. Already there are ominous signs that the country could face unrest as citizens vent their anger and frustration against poor basic services. The xenophobic attacks (2009/10), the ‘open toilet’ saga (2010/11), and the ‘feces protests’ (2013/14) (protests against the bucket toilet system in Western Cape) all bear evidence of the general discontent of urban people with poor service delivery. This paper discusses the challenges of providing water and sanitation to urban slum settlements in South Africa. The challenges include rising backlogs, poor cost recovery, a pervasive culture of non-payment for water services, and huge and unsustainable water deficits. These challenges hamper the ability of municipalities to provide sustainable and efficient services. Urgent attention to these problems is needed.