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After Nigeria, VW signs assembly plant deal with Ethiopia

The Punch
Sunday February 3, 2019
Rasheed Bisiriyu

Volkswagen has signed a Memorandum of Understanding with the Government of Ethiopia for the development of an automotive industry including the establishment of an assembly plant in the country.   Ethiopia has thus become the third country in the sub-Saharan Africa to sign a MoU with Volkswagen in the last six months.

This is coming after Ghana and Nigeria signed similar agreements with Volkswagen in August 2018.   In Nigeria, Volkswagen undertook to implement a phased approach in relation to the assembly of vehicles initially from assembly kits with a long-term view of establishing Nigeria as an automotive hub in West Africa.

In Ghana, Volkswagen accepted to establish a vehicle assembly facility and conduct a feasibility study for an integrated mobility solutions concept.   

The MoU was signed by the Head of the Volkswagen sub-Saharan Africa, Thomas Schaefer, and the Commissioner for Ethiopian Investment Commission, Abebe Abebayehu, a statement by the auto firm said.    

The MoU signing was witnessed by the Ethiopian Minister of Finance and Economic Cooperation, Ahmed Shide, and the President of the Federal Republic of Germany, Frank-Walter Steinmeier, who was on a state visit to Ethiopia.    

The statement explained that the signing of the MoU would pave the way for Volkswagen and the Ethiopian government to commence high-level and technical collaboration for the development of the automotive industry and policy framework.    

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“The MoU identifies four key pillars as important for the development of the Ethiopian automotive industry. These are the establishment of a vehicle assembly facility, localisation of automotive components, introduction of mobility concepts such as app-based car sharing and ride hailing as well as the opening of local skills development training centre,” it stated.  

Volkswagen and the Government of Ethiopia, the statement added, promised to expedite the reassertion of the vision by drawing up timelines and key milestones for the project.  

Volkswagen specifically undertook to draw upon 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.  

In turn, the Ethiopian government expressed commitment towards the support of the establishment of specialised clusters owing to the economies of scale and efficiency realised through the project.    

The Ethiopian government acknowledged the pivotal role played by trainable labour force in creating a thriving and competitive automotive industry.  

Volkswagen is expected to work 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.    

“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 African development strategy. Additionally, Volkswagen intends on tapping into existing expertise and strategic resources in Ethiopia to establish a thriving automotive components industry.”  

Abebayehu said, “Ethiopia is in a remarkable economic, political and social transformation that puts inclusive and sustainable growth and private sector development at its heart.    

“With a fast-growing economy and stellar performance on the FDI inflow, Ethiopia is asserting itself as a competitive and preferred location of choice for investment.  

“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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