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Volkswagen has signed a Memorandum of Understanding with the Ethiopian government for the establishment of an assembly plant in the country.
This makes Ethiopia the third country in sub-Saharan Africa to sign a MoU with Volkswagen in the past six months. Volkswagen had finalized similar agreements with Ghana and Nigeria in August 2018.
In the case of Nigeria, Volkswagen’s plan is to implement a phased approach for the assembly of vehicles. Initially, assembly kits would be used while the long-term goal would be to establish Nigeria as an automotive hub in West Africa.
In Ghana, Volkswagen plans to set up a vehicle assembly facility and to conduct a feasibility study for an integrated mobility solutions concept.
The MoU between the Ethiopian government and Volkswagen was signed by the Head of the Volkswagen sub-Saharan Africa, Thomas Schaefer, and the Commissioner for Ethiopian Investment Commission, Abebe Abebayehu in the presence of dignitaries like the Ethiopian Minister of Finance and Economic Cooperation, Ahmed Shide, and the President of the Federal Republic of Germany, Frank-Walter Steinmeier, who was making a state visit to Ethiopia.
It is expected that the signing of the MoU marks the commencement of collaboration between Volkswagen and the Ethiopian government for the development of the automotive industry and policy framework.
Volkswagen issued a statement stating that the MoU identified four key pillars as important for the development of the Ethiopian automotive industry. They are the establishment of a vehicle assembly facility, localization of automotive components, introduction of mobility concepts like app-based car sharing and ride hailing and the establishment of a local skills development training center.
Volkswagen agreed to leverage its global experience in global supply chains in the automotive industry to help develop an automotive industry in Ethiopia. On its part, the Ethiopian government agreed to support of the establishment of specialized clusters owing to the economies of scale and efficiency realised through the project.
The Ethiopian government also acknowledged the importance of a trainable labor force in helping to create a competitive automotive industry. Volkswagen is expected to collaborate closely with the Ethiopian higher education and training institutions for skills development and capacity building of local talent.
Schaefer said, “Our sub-Saharan African strategy is gaining momentum with the signing of the third MoU in the last six months. We are grateful for the support and vision of the Ethiopian Government in identifying the automotive sector as one of the key manufacturing industries that can help the country to realise its Vision 2025 goals.
He said that Ethiopia is an ideal country to advance Volkswagen’s sub-Saharan African development strategy as it has one of the fastest growing economies in the region and the second highest population on the continent. Volkswagen also intends to use existing expertise and strategic resources in the country to help it establish a thriving automotive components industry.
Abebayehu said that currently Ethiopia is undergoing a remarkable economic, political and social transformation with the goal of achieving inclusive and sustainable growth and private sector development. The country has a fast-growing economy and demonstrated stellar performance in terms of FDI inflow, Ethiopia has become a competitive and preferred country for investment.
He concluded, “This MoU signing with Volkswagen is yet another testimony that Ethiopia is open for business. Through this partnership, we hope to advance a joint vision for the development of a competitive, vertically integrated and sustainable automotive industry. The Government of Ethiopia stands ready to effectively translate this partnership into concrete actions and actual investment.”
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