Informal sector dynamics have been a significant aspect of urban economies in Mozambique since the early 2000s. A qualitative approach was employed through interviews with business owners, community leaders, and government officials to gather insights into the operational dynamics and legal barriers faced by the informal sector in urban Mozambique. The findings highlight a significant proportion (45%) of urban businesses operate informally due to regulatory gaps and lack of access to formal financing. Legal frameworks often fail to recognise these businesses, leading to discriminatory practices and economic marginalization. The study concludes that legal reforms are imperative for inclusively integrating the informal sector into mainstream economy structures in Mozambique's urban areas. Recommendations include strengthening existing legal protections for informal sector workers and businesses, improving access to formal financial services, and enhancing community engagement with government agencies to foster inclusive growth policies.