The informal sector in urban areas of Africa often operates outside formal legal frameworks, leading to regulatory challenges and economic inefficiencies. The study employs an analytical approach, reviewing legal documents, academic literature, and secondary data sources to understand the current state of informal sector regulation in Liberia. A thematic analysis was conducted on relevant policy documents. A significant proportion (45%) of urban businesses operate informally, with laws such as tax regulations and land tenure policies often conflicting or insufficiently enforced, leading to persistent economic disparities among these enterprises. Liberia's current informal sector policies are inadequate for the scale and complexity of this sector, resulting in inefficiencies and inequality. Recommendations include harmonizing existing laws, enhancing enforcement mechanisms, and fostering collaboration between stakeholders. Recommendations include harmonizing tax regulations with land tenure policies, increasing community engagement through participatory planning processes, and establishing dedicated bodies to monitor compliance with new policies.