Globally, peri-urban areas are experiencing rapid urbanization. Conventional infrastructure development is generally slow to catch up and the lack of basic sanitation in peri-urban areas is a constantly growing—and often overlooked—problem. There are examples where these challenges have been addressed by off-grid “productive” sanitation systems that provide opportunities for recovery and reuse of valuable waste stream resources. However, governing such systems and ensuring effective municipal policies can be challenging since the socio-economic contexts in many peri-urban areas are transforming rapidly. A comparison of two initiatives in Bolivia and South Africa offers valuable insights for introducing functional off-grid “productive” sanitation systems relying on urine-diverting dry toilets (UDDTs) in peri-urban settlements. Findings suggest that acceptance of the UDDTs by households largely rely on consistent awareness raising and capacity building, in addition to adaptation to the local needs and creating a sense of ownership over the toilet system. Changing perceptions of what constitutes an aspirational toilet, and developing services for waste management collection, seem to be crucial components for ensuring long-term use and functionality of the UDDTs. Investments and further innovations for upscaling of resource recovery systems are needed to make these systems cost-effective and logistically viable. To attract these additional investments, it will be crucial to assess the societal economic benefits of off-grid “productive” sanitation compared to centralized wastewater systems. The comparison also highlights that off-grid sanitation requires a clear division and coordination of roles and responsibilities among different authorities, in order to transcend political difficulties that emerge where these boundaries overlap. Thus, integrating clear boundaries into urban planning policies, and including informal processes in communities, play an important role in improving governance of basic services in peri-urban areas.