The developing economies are experiencing an unprecedented rate of urbanization, mainly in the poor urban areas as shown through the sprawling of slums and informal settlements of several cities in the world. This is also the case of Kabul, the capital and primate city of Afghanistan where around 82% of the people live in what is considered to be informal. Various interventions, from physical upgrading to urban renewal have been undertaken by the government and international organizations but none of them has succeeded to solve the rapid growth of informal settlements. Given the above, the magnitude of the urbanization and the complexity of informal settlements, this paper suggests the use of an integrated multi-sector upgrading as a reactive and proactive upgrading strategy. The paper analyzes the informal settlements formation and the conventional upgrading strategies used in Kabul city. This will help to identify dominant practices and finally rationalize them. For this purpose, Hothkhel has been selected as the case study. As a result, it has been found that the areas occupied by informal settlements have not been built to their respective full capacity. This implies that there is still room for additional buildable volume likely to lead to the preservation of available agricultural land. The result also indicates that the integrated multi-sector upgrading has the scale-up potential to increase the reach of beneficiaries and to ensure an inclusive and efficient urbanization.