Housing is necessary component of human livelihood. Without appropriate shelter, people cannot meet their basic needs and participate adequately in society. Nekemte town has intensive migration, high demand of housing, a poorly developed economic base, inadequate housing policy, high levels of unemployment and incidence of poverty and squatter habitation. Hence, this paper gives an analysis on rapid urbanization, squatter settlement and housing policy interface in Nekemte town. The methodology employed here is a descriptive analysis where the sources of the data were both primary and secondary. To have reliable information all the towns’ administrative divisions were selected on the basis of the magnitude of the squatting problem and its contribution to unplanned city expansion. Based on the squatter data obtained from each administrative region, samples were selected using a systematic random sampling.
The major finding of the study shows that, there was a wide gap between rapid urbanization, spread of squatter settlement and housing policy. According to the research, there was high town physical expansion with illegal land holding for housing and little policy contribution to solve the problem. Hence according to land lease policy proclamation, down payment or 10 percent of the total price of the lease cost was not affordable with the actual income of the squatting people indicated in the research. Therefore, this market approach of land lease price was not inclusive approach for the poor people of the area. In addition to the down payment the proclamation guarantees the completion of construction with in the period specified under the lease contract indicates up to 24 months for small construction project, up to 36 months for the medium construction project and 48 months for large construction project. From this, everybody can investigate that, if the poor or squatting people win the land lease bid, it is difficult to construct house with in the period due to the cost in addition to the price of down payment.
Initially, integrated housing program aimed to solve the problem of the poor living in urban areas of the country in general and study area in particular. Based on the proclamation No 122/99 the one want to buy integrated house should pay 20% of the total cost and 80% is covered by bank for residential purpose. But when we see the integrated housing program housing cost whether for final or dawn payment, was very high in comparison to household monthly revenue.