January 28, 2019 (Ezega.com) - In a bid to expand its market in Sub-Saharan Africa, the German automaker, Volkswagen, has signed a memorandum of understanding (MOU) with Ethiopia’s government. The MOU will lead to the establishment of a car assembly plant using locally manufactured components.
In the presence of the president of the Republic of Germany, Frank-Walter Steinmeier, an MOU was signed by Abebe Abebayehu, a commissioner of Ethiopia’s Investment Commission (EIC) and Thomas Schaefer, the Head of Volkswagen in the Sub-Saharan region, according to Automotive World.
Volkswagen is considering Ethiopia’s economic progress that is fast-paced. In the last decade, the country’s GDP has been above 8%, which is one of the highest globally.
Under the G20 compact with the continent’s ingenuity, Ethiopia remains a primacy and target nation for Germany.
With the MOU signed, the German automaker has set its eyes on four key areas;
• Establishing a vehicle assembly plant
• Localizing the manufacturing of motor vehicle components
• The introduction of mobility models like application-based car sharing, and
• The creation of training centers across the country
In this regard, Volkswagen and Ethiopian tertiary institutions will work closely to develop skills and build the capacity of local talent.
The regional head of Volkswagen was cognizant of the opportunities Ethiopia has to offer.
“As one of the fastest growing economies and with the second highest population in Africa, Ethiopia is an ideal country to advance our Sub-Saharan Africa development strategy,” he said.
Conversely, the company is keen to tap into the country’s existing strategic resources and expertise to facilitate the establishment of a thriving automobile components industry.
Ethiopia is the third African country in the region to sign an MOU with the German automaker. Nigeria and Ghana signed an agreement with Volkswagen in August 2018. In Ghana, the company will create an assembly plant and conduct a feasibility study for an integrated mobility solutions concept.
In Nigeria, Volkswagen is implementing a phased approach of an assembly unit with a long-term strategy of embracing Nigeria as an automotive hub in West Africa.
The company has been developing automobiles in South Africa since 1951. In the continent, it has assembly operations in Kenya, Algeria, Rwanda, and Ethiopia.
Under an ambitious campaign dubbed TRANSFORM 2025+ brand plan, the German automaker is strengthening its operations in the region and turning its attention on new and emerging markets.
Africa’s automobile industry is small at the moment, but the continent has a huge potential to grow into an automotive producing giant in the future.