The study makes assessment of business formalization on economic growth in Ilemela Municipal Council. The specific objectives of the study were to measure the performance of MKURABITA since its inception, to examine the extent to which MKURABITA has improved fair competition for small business in the economic growth. Finally, to assess the extent to which MKURABITA simplify registration procedures for movable properties. The study adopted a case study research design. The target population was 154 small business operators in Ilemela Municipal Council. Primary data was collected using questionnaires, interview and observation. Secondary data was collected using documentary review such as published materials, relevant documents pertaining to sales records, books, pamphlets, newspapers, reports and other information from various business web sites. The data were analyzed quantitatively using Statistical Package for Social Sciences (SPSS) Computer Software. The factors that limit the business formalization according to research findings are an unreformed system of registration and regulations, lack of private sector organizations competent to participate in a dialogue with the government on behalf of informal and small scale enterprises, and a general failure to recognize formalization to be an exchange transaction on terms needing the agreement of both parties. The study concludes that the business formalization on economic growth is low. The study recommends the government to reform the system of legislation and regulations to enable those who are capable to register their business willingly and private sector organization has to be given additional room to participate in a dialogue with government on behalf of informal and a small-scale enterprise complains