This study examines the key governance dynamics in Uganda’s rural safe water supply service systems. It aims to unravel policy and contextual issues that undermine effectiveness of the currently dominant community-based management (CBM) model of water supply and sustainability. Broadly, CBM is founded within the neoliberal and post-welfare policy regimes that promote the philosophy of a ‘reduced state’. More specifically, CBM forms part of the new public management (NPM) and governance frameworks that promote decentralised and multi-actor approaches to ‘efficient’ and more ‘responsive’ public service delivery that include networks or partnerships between public and private (for profit and not-for-profit) actors, and service beneficiaries. Whereas evidence has shown that effective CBM translates into high levels of equity, efficiency and overall sustainability of services, policy proposals and institutional frameworks promoting it continue to show varying results across and within countries. Uganda provides a case study of contexts where CBM has not produced good results despite its promotion and inclusion within the policy and institutional framework for rural safe water supply. Using a single case and mixed methods research design, this study undertook an extensive review of Uganda’s national water sector policy and programme documents, in addition to interviews with key water sector actors from the public, private and civil society sectors, and the water user community. The results of the study indicate that whereas CBM is well-known in Uganda’s rural water sector and policy framework to be a desirable approach for achieving the much needed sustainability of rural point-water supply, service authorities especially from government are not consciously taking the necessary actions to leverage its effectiveness. This failure is at the very heart of the weaknesses within the post welfare policy agenda which embraces policies such as decentralisation, ‘marketisation’, participatory and demand responsive approaches as well as networks or partnerships in the provision of public goods and services. The study suggests an enabling framework for CBM systems for rural point water facilities, which does not completely reject the idea of government withdrawal from public service delivery as proposed in the neoliberal framework. The framework rather argues for the need for public authorities in democratic states to pay deliberate attention to context specific circumstances and conditions that tend to disable good policy and programme proposals such as those embedded within the CBM model of rural water supply and sustainability in developing contexts similar to Uganda. The study therefore advocates an effective central and local government authority that consciously and creatively fulfills its ‘new roles’ conceived within the frameworks of NPM and good governance, and reflected in popular views of government as an ‘enabler’, thereby extending the debates on the role of government in the post-welfare, neoliberal and good governance agenda.