The urban landscape of Lesotho is characterized by a significant informal sector that contributes substantially to the country's economy but operates outside formal legal frameworks. The study employs a mixed-methods approach combining qualitative interviews with stakeholders from various sectors including government officials, community leaders, and informal sector entrepreneurs. Quantitative data on employment statistics are also analysed to provide empirical insights. Insufficient legal protections exist for informal sector workers, leading to high levels of vulnerability and exploitation. The urban planning policies often overlook the needs of this sector, resulting in poor integration into formal urban development initiatives. Lesotho’s current legal framework inadequately supports the growth and stability of its vibrant but marginalized informal sector, necessitating reforms that enhance worker rights and improve urban planning to better accommodate informal activities. The government should enact comprehensive labour laws protecting workers in the informal sector. Urban development policies must incorporate space for informal settlements and businesses to flourish legally.