PRETORIA – Volkwagen has signed a memorandum of understanding (MoU) with the Ethiopian government on collaborating and delivering a joint vision for the establishment of a motor industry in that country.
The MoU was signed by Thomas Schaefer, the head of the Volkswagen sub-Saharan region, and Abebe Abebayehu, the commissioner of the Ethiopian Investment Commission (EIC), in the presence of Ethiopian Minister for Finance and Economic Co-operation Ahmed Shide and Federal Republic of Germany President Frank-Walter Steinmeier, who is on a state visit to Ethiopia.
Schaefer said Volkswagen’s sub-Saharan Africa strategy was gaining momentum with the signing of the third MoU in the past 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 realise its Vision 2025 goals.
“As one of the fastest-growing economies, and with the second highest population on the continent, Ethiopia is an ideal country to advance our sub-Saharan Africa development strategy,” he said.
Schaefer said Volkswagen also intended to tap into existing expertise and strategic resources in Ethiopia to establish a components industry.
Abebayehu said that with a fast-growing economy and stellar fixed direct investment inflow performance, Ethiopia was asserting itself as a competitive and preferred location of choice for investment.
He added that the signing of the MoU with Volkswagen was further testimony to the fact that Ethiopia was open for business.
Through its wholly-owned South African operations, Volkswagen has now signed three MoU’s in sub-Saharan Africa following the signing of agreements with Ghana and Nigeria in August last year.
In Ghana, Volkswagen undertook to establish a vehicle assembly facility and conduct a feasibility study for an integrated mobility solutions concept, while in Nigeria it undertook to implement a phased approach for the assembly of vehicles, initially from assembly kits with the long-term aim of establishing Nigeria as an automotive hub in West Africa.
The signing of the MoU paves the way for Volkswagen and the Ethiopian government to commence high-level and technical collaboration, which was integral to the development of an automotive industry and policy framework.
It identifies four key pillars as important for the development of the Ethiopian automotive industry.
These include the establishment of a vehicle assembly facility, localisation of automotive components, introduction of mobility concepts such as app-based car sharing and ride hailing, plus the opening of a local skills development training centre. They both undertook to expedite drawing up time lines and key milestones.
Volkswagen further undertook to draw on its vast global experience in global supply chains in the automotive industry in anticipation that the project would lead to the development of an automotive industry in the country.