Investors in Ethiopia’s Industrial Parks Raise Concerns Over Banking Restrictions and Fund Transfer Limits

Investors operating in Ethiopia’s industrial parks have raised concerns over banking procedures and restrictions on transferring funds between financial institutions, saying the limitations are increasing operational costs and affecting business efficiency.

The concerns were presented at a consultative forum attended by officials from the National Bank of Ethiopia and the Industrial Parks Development Corporation (IPDC), as well as representatives from commercial banks.

Restrictions on Fund Transfers and Foreign Currency Delays

Investors highlighted difficulties in transferring funds between banks, noting that limited financial flexibility is creating operational constraints. Some companies reported being unable to move capital held in their own accounts to other banks to optimize financial management.

A representative from Everest Apparel in Hawassa Industrial Park stated that restrictions on transferring company funds have made it difficult to manage liquidity efficiently.

Investors also reported delays in processing foreign-currency transactions, particularly US dollar payments for government-related obligations, such as land lease fees and immigration fees. In some cases, payment processing delays exceeding one week have resulted in penalties of up to $30 per day, increasing financial pressure on companies operating in the parks.

Concerns Over Foreign Currency Interest and Lending Requirements

Another issue raised was the inability of investors to earn interest on foreign currency deposits held in bank accounts for extended periods. Some companies said requests to place foreign currency in time deposit accounts were declined by banks, citing a lack of regulatory directives.

A representative from NASA Garment in Hawassa Industrial Park noted that lending practices continue to rely heavily on property collateral requirements, limiting access to working capital.

Investors also indicated that the limited distinction between Capital Expenditure (CAPEX) and Operating Expenditure (OPEX) in loan assessments has contributed to liquidity challenges, particularly for domestic manufacturers seeking operational financing.

Special Economic Zones Expansion and Regulatory Framework

Ethiopia currently has approximately 22 operational Special Economic Zones developed by both public and private entities, supporting nearly 700 enterprise activities nationwide.

According to IPDC data, domestic investors account for 58.5% of new firms entering Special Economic Zones, reflecting growing local participation in industrial development.

The government introduced the Special Economic Zone Proclamation No. 1322/2016 to strengthen the regulatory framework and attract large-scale investment. Under the directive, developers must meet minimum capital requirements of 75 million US dollars and develop at least 50 hectares of land to qualify for licensing.

Analysts note that Special Economic Zones remain central to Ethiopia’s industrial policy, supporting diversification into trade, logistics, and services while encouraging export-oriented production.

Source: Capital