Across the developing world, the informal sector continues to expand in absolute and relative terms. Its perpetuation and growth has been largely due to the weak capacity of the formal sector to generate adequate employment and incomes in the face of high rates of urbanization, labor-force growth, and rural-urban migration. This book focuses on the situational analysis of the informal economy in Gondar city. It reveals that most of the informal sector participants are making a livelihood in their activities. The lack of formal employment and the desire to survive were found to be the two issues that enhance the growth of the informal sector in the city. While the informal sector has the potentials to graduate to micro and small scale enterprises, a number of constraints currently inhibit the development of the informal sector and its integration with other sectors of the economy. This book will provide decision makers, planners, and policy makers with important information about the environment in which the informal sector operates, the constraints faced by the sector and various options for making informed decisions regarding the informal sector at different levels.