In C�e d'Ivoire and Senegal water service is provided by privately operated national water utilities operating under enhanced lease contracts. While the national operators have performed relatively well within their service areas, their ability to expand service to rural areas has been limited. This Note focuses on the key factors shaping rural service expansion: reliance on cross-subsidies, the limited transfer of commercial risk to the private sector, and the lack of competition for serving new population centers beyond the utilities' existing areas of exclusivity. It compares the national model with those of more decentralized service provision for rural areas.