This study attempted to analyze the process of urban growth and development in Bantu town of Tole woreda. Thus, the study assesses how the population was growing in Bantu town first. It also looks perception and participation of urban dwellers on the process of urban development second. It further explores the major challenges and prospects for urban growth and development in the study area. For the purpose of this study the researcher used both primary and secondary data. Besides, both quantitative and qualitative data were used and the data were also systematically analyzed by using frequency, spear man’s correlation co-efficient and severity index analysis. The empirical findings revealed that population growth in Bantu town are very slow compared to the age of the town. However, population growth rate is faster in Bantu town in between 1994 and 2007 census years which accounts 6.5%. Among population growth determinant factors migration played a significant role in determining urban population growth in the study area as indicated by survey and the 2007 census, which accounts 77.6% and 53.26 % respectively. The spatial size of Bantu town increased from 83.1 hectares before 2007 to 296 hectares after 2007. The urban dwellers of the study area were participating in urban development process and also show interest in the future to participate in urban development as major resources of Bantu town. Though intra-urban road infrastructure increment from 2.1kms before 2012 and 5.2kms in 2013, generally road infrastructural improvement which is vital for urban development lagged behind compared to the proposed intra-urban road which is 44.6kms in length. According to this study, HEP provision problem, absence of road that passes through the town, low quality of the existing road, absence of initial advantage in the study area for urban growth, ineffectiveness of the master plan, poor and inefficient urban management together with administrative instability in the municipal office of Bantu town were among the major constraints for urban growth and development in the study area. Town’s location, topography, human resources, agro-industrial development and tourism development will bring additional development for the town if they are effectively managed and used.