The article is devoted to the features of informal settlement in Addis Ababa and the role of governmental and non-governmental organizations and public participation in the sustainable development of informal settlements. The purpose of the article is to identify the main types and characteristics of informal settlements and to reveal the factors that hinder the success of programs for updating informal settlements in the city. The research methods were the analysis and generalization of domestic and foreign literature on this research problem. The main conclusion of this study is that the principles of folk architecture are integral components of solutions for the sustainable development of informal settlements.