This study investigates the challenges faced by street traders in Mnquma Local Municipality. The purpose is to examine the factors affecting street traders trading at N2 Mthatha Street at Butterworth in Mnquma Local Municipality. For this reason, it was necessary to study the literature on local economic development. The challenges facing street traders were also investigated and analysed in order to formulate recommendations for solving challenges facing street trading in Mnquma Local Municipality. In order to fulfil the objective of the study and to address the research problem faceto-face interviews were conducted with the street traders, municipal officials and Hawkers’ Association. The literature review and the interviews enabled the recommendation of possible answers to the problem. These recommendations would be valuable and, one hopes, will also be of assistance to the Mnquma Local Municipality. Findings of this study indicate that challenges faced by street traders in Butterworth include lack of financial support to start their businesses. Also, the fact that there is no water taps that can be used by the members of the public in the Central Business District (CBD) in Butterworth as well as street lights at night is one of the challenges. Recommendations were made with regard to support and assistance for street traders, environmental management and also a recommendation on business registration and licensing. The study concludes that if the Mnquma local municipality can implement all the proposed recommendations, all the factors raised by street traders as disturbing the functionality of their businesses particularly in Butterworth will be rectified.