Senior executives of the Industry Park Development Corporation (IPDC), which is converting all industrial parks into special economic zones, have pressed for deeper financial engagement, where credit remains a major constraint.

They are targeting one billion dollars in exports by next year, though the manufacturing goal has been set at 300 million dollars. Unable to recover from export market losses after the country was delisted from the African Growth & Opportunity Act (AGOA), the executives are counting on solar-cell exports, with three solar-cell exporters operating in the Hawassa Special Economic Zone, and more expected to join.

Federal government officials want to see special economic zones to drive exports, but developers argue that financing remains constrained, costly and poorly coordinated with conditions in the zones. The minimum capital requirement for special economic zone developers is set at 75 million dollars, though the authorities say they reserve the right to revise it. Even with tax relief and government support, developers complain that financing remains difficult.

Twelve industrial parks have been upgraded to special economic zone status, with 700 companies employing fewer than 100,000 people. They include four private companies (Arerti, Eastern, Huajan and George Shoe) as well as three newly designated zones, including Universal and Addis Tomorrow. The Investment Commission has licensed a sub-developer expected to have capital of 30 million dollars. Domestic investors now account for 58pc of special economic zone stakeholders, a shift officials link to changes in the lease law that allow lease payments in Birr rather than hard currency.

The National Bank of Ethiopia (NBE) issued a directive in January allowing bank branches to open inside economic zones, a move authorities state was intended to limit participation to no more than 20 banks. Yet only four banks - the Commercial Bank of Ethiopia (CBE), Awash Bank, Enat Bank and the Cooperative Bank of Oromia (Coop Bank) - are operating inside them. Developers urged changes to certain rules and pressed banks to devise innovative financing structures.

Two weeks ago, the Corporation's executives convened bankers, developers and officials from the NBE and the Ethiopian Investment Commission (EIC) for a discussion held at the Skylight Hotel on Africa Avenue (Bole Road) that exposed the major problem.

Habtamu Simachew (PhD), a senior legal advisor at the Investement Commission with more than 15 years of experience in legal advisory, research, and teaching, told participants that problems have also surfaced from the NBE rules on collateral registrations. While the directive allows for more than 15 banks, some experts say only half might be eligible now. To qualify, banks should hold more than one percent market share, meet liquidity thresholds and keep a capital adequacy ratio above two percent.

According to Abera Ayalew, a deputy for regulatory affairs at the NBE, the focus is on the quality of products offered by lenders to international customers, who expect better service.

“It isn't a one-time requirement," Abera said. "It must be maintained.”

Mitiku Geberekidan of Anbesa Bank finds the bank-branch initiative discouraging and urged the NBE to focus on operational excellence. He called for African settlement accounts to be included in the system. Mitiku also flagged that the capital requirement is set in foreign exchange, which, together with monetary reforms, has increased loan demand from developers.

For developers, the bottlenecks extend beyond entry requirements. Debt-to-equity ratio rules have blocked developers' access to financing, argued Hibret Lemma, a representative for the Hawassa Special Economic Zone.

"Offshore account management remains at an early stage," he said.