Now d ays squatter settlements a re no more a coping stra tegy of housingrnproblems; rather it is becoming an adaptive strategy designed by manyrnurban citizens who have no access to formal housing or plots to buildrntheir own houses. The Contemporary shelter crisis experienced by manyrnc ities of the world are the result of chronic shortages of low cost housesrnand accompa nied basic social and physical infrastructure and services.rnFormulation of sound policies and s tra tegic plans to address shelterrncrisis, there is a need to understand the underpinning causes for thernrapid growth of squatter settlements. More impor ta ntly, there is a need tornadmit that previous policy interventions did little or failed to address thernproblem effectively . With this background this research is an attemptrnexamine the cause and con sequ ences of squatter settlements a long riverrnbanks in selected kebles from Bole and Kirkos sub cities.rnThe Study used household surveys, unstructured interviews, focusedrngroup discussions and observations to gather primary d a ta. Relevantrninformation also obtained from secondary data including books,rnunpublished documents, policy papers, regulations and guidelines. Bothrnprimary and secondary data are analyzed using both qualitative andrnquantitative data a n alysis techniques.rnThis empirical study uncovered that the major causes of squa ttcrrnsettlements a re mainly poverty driven which include unaffordable housernrent, rapid rural urban migration, development induced displacement,rnunaffordable access to formal housing or urban land and people'srnanticipation to become squatter land lords a nd generate subs tantialrnincome from squatter tena n ts .rnThis study also revealed that squatter settlements have suffered fromrnvarious socio-economic and environmental problems. The fact that thernsquatters are s itua ted a long river banks , they are highly vulnerable tornfrequent floods which r isks residents' live and property. Since thernsettlements grow outside the master plan framework of the city, they a rerndeprived of basic socia l and physical infrastruc ture. Lack of basic socia lrnand physica l infrastructure has resulted in severe h ealth problems whichrnmanifested as prevalence of variou s diseases. On the top of this, the mostrnserious problems mentioned by the people is uncertainty which is relatedrnto th eir land tenure status. All the squ atter settlements identified in thernarea are highly unsecured of the plot they occupied. This n egativelyrnaffected investment ini tiatives to improve the social and physicalrnenvironments of the area.