For a country that has the world’s lowest rate of car ownership, a blessing has come upon Ethiopia through the plans of Volkswagen to establish a local car assembly in the country.
Volkswagen signed a Memorandum of Understanding (MoU) with the government of the Ethiopia which will see the German car manufacturer building a car assembly plant using locally manufactured components for the development of an automotive industry in the country.
It is a move by the car giant to increase its market in sub-Saharan Africa while at the same time ensuring the locals in Ethiopia benefit from this.
The deal was signed by Abebe Abebayehu, Commissioner of Ethiopia’s Investment Commission (EIC) and Thomas Schaefer, Head of Volkswagen in the Sub-Saharan region. It was signed in the presence of the German president, Frank-Walter Steinmeier.
Volkswagen is keen on the development of the automotive industry in the East African country. Ethiopia currently has the world’s lowest rate of car ownership with only two cars per 1,000 inhabitants, according to a 2014 Deloitte report. High import taxes make it a remote possibility for the majority of Ethiopians to own a car.
Hence, the development of the automotive industry in Ethiopia will be hinged on four key areas – the establishment of a vehicle assembly facility; localization of automotive components; introduction of mobility concepts, such as app-based car sharing and ride hailing, as well as the opening of a local skills development training centre.
This means that VW will have to work hand in hand with Ethiopia’s tertiary institutions for skills development and capacity building in local people.
“Ethiopia is in a remarkable economic, political and social transformation that puts inclusive, sustainable growth and private sector development at its heart,” said Abebayehu, the Commissioner of Ethiopia’s Investment Commission.
“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,” he added.
Ethiopia’s fast-growing economy is providing room for VW to come and invest in the country.
Schaefer, Head of Volkswagen in the Sub-Saharan region, said that Ethiopia being “one of the fastest growing economies, and with the second highest population on the continent, is an ideal country to advance our sub-Saharan Africa development strategy. Additionally, Volkswagen intends on tapping into existing expertise and strategic resources in Ethiopia to establish a thriving automotive components industry.”
So, VW’s focus on investing into new and upcoming markets such as Africa will see Ethiopia housing a plant for the German car manufacturer.