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Urban poverty and unemployment in many urban centers of Ethiopia has been expanding and pushed many people to various income generating activities in the informal sector. Just like other urban centers of the country, the urban poor people in Hawassa city are engaged in different informal activities; however, their participation is rapidly increasing and intensifying in street businesses. With due emphasis on this, this study aimed to assess the socioeconomic characteristics and challenges of urban informal sector in SNNPRS with particular focus on street vendors in Hawassa City. In order to achieve this objective, multi-stage sampling techniques were applied and a sample of 238 street vendors were selected and relevant data were gathered through questionnaire, key informant interviews and observations. The data collected from different sources were analyzed quantitatively and qualitatively. Accordingly, the finding of the study shows that most street vendors are single, young andwith a low education level (grades 1-8). The study also found that the reasons for street vendors participating into informal activities had lack of alternatives, job opportunities and insufficient monthly income.