The children of the Grace Revival School do not have far to go when they need the lavatory. They get up from their ramshackle desks and move just outside their corrugated iron classroom to the vast dungheap that stands beside the building.

There are no latrines for the 74,000 people who live in their section of Kibera, the biggest slum in Africa, which lies either side of the main railway line between Nairobi and Mombasa in the Kenyan highlands.

People there use what, with dark humour, are called "flying toilets". They defecate in a plastic bag and then throw it into the street or on to one of the vast dung heaps. Some just visit the heaps and relieve themselves directly. The heap next to Grace school is about 20 feet high and the size of a quarter of a football pitch.

The stench is unimaginable. When it rains, a noxious black liquid runs off the heap, and through the school, over the dirt floor of the classrooms. It seeps into the drinking water supply pipes, which run beneath the dump.

There is more to this story than a piece of prurient poverty pornography. It has a point, which is the one made more genteelly by the UN's annual Human Development Report, published tomorrow. For Kibera is but one stark example of what is perhaps the greatest developmental challenge facing humanity.

More than one billion people live without clean water. Some 2.6 billion - half of the developing world's population - lack access to sanitation. The two issues are inextricably linked, for without proper sanitation pollution of drinking water is almost inevitable.

At the start of the 21st century, 5,000 children die every day for want of clean water. That is why, in the sprawling slum of Kibera, where typhoid and dysentery are rampant, Kevin Watkins, the chief researcher of the UN report, found that child death rates run eight times higher even than in the rest of Nairobi.

We know from our own history that providing sanitation and clean water is the biggest single thing that can be done for the poor. Dysentery, typhoid and cholera killed as many children in Manchester and London in early Victorian times as they do in Africa today. The increasing wealth from industrialisation boosted income, but child mortality barely changed - until the introduction of sewers. It was the same in New York, Birmingham and Paris.

Water and sanitation are among the most powerful preventive medicines available to reduce infectious disease. The presence of a flush lavatory in a house, the UN report says, reduces the risk of infant death by more than 30 per cent. Sewers save more lives than antibiotics. Astonishingly, then - despite one of the Millennium Development Goals being to halve the number of people without water and sanitation - the amount of aid to this sector has, according to the Commission for Africa, fallen by 25 per cent over the past decade.

The problem is twofold. The first is that such basics are unfashionable among Western donor governments. The second is that many African and Asian governments do not prioritise the area; in Ethiopia the military budget is 10 times the water and sanitation budget; Pakistan spends 47 times more on guns than on sewers and clean water.

Why? Because water and sanitation are problems which disproportionately affect the poorest, women and children in particular, - a class which has no political leverage with urban Third World elites.

Water is about power. The most striking political example of which, the report shows, is that Israeli settlers take six times the water from the West Bank as local Palestinians. But there are countless economic examples. In Ghana the poorest, who use standpipes provided by private companies, pay treble what the better-off pay for water piped to their homes. In Kibera they pay five times more. People living in many of the world's most squalid slums pay more per litre for water than people in New York and London. The perverse rule operating in water markets is that the poorer you are, the less you get and the more you pay.

To set aside the financial resources to fulfil the Millennium Development Goal to halve the number of people without sustainable access to safe water would cost about $10bn (