VW and Ethiopian government sign agreement

Volkswagen has signed a Memorandum of Understanding with the Ethiopian government of Ethiopia aimed at collaboration and the development of an automotive industry in that country.

The Memorandum of Understanding (MoU) was signed by Thomas Schaefer, Head of the Volkswagen Sub-Sahara Africa Region and Commissioner of the Ethiopian Investment Commission (EIC), Abebe Abebayehu. 

The MoU was signed in the presence of the Ethiopian Minister for Finance and Economic Cooperation, Ahmed Shide and Frank-Walter Steinmeier, President of the Federal Republic of Germany, who is on a state visit to Ethiopia.

The signing of the MoU paves the way for Volkswagen and the Ethiopian Government to commence high-level and technical collaborations integral to the development of an automotive industry and policy framework.

The MoU identified four key pillars as important for the development of the Ethiopian automotive industry.

These included 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 a local skills development training centre.

Volkswagen and the government of Ethiopia both undertook to expedite the reassertion of the vision by drawing up timelines and key milestones for the project.

Furthermore, Volkswagen 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 Ethiopia.

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

Volkswagen will work closely with the Ethiopian higher education and training institutions for skills development and capacity building of local talent.

Ethiopia becomes the third country in Sub-Sahara Africa to sign an MoU with Volkswagen in the last six months.

It follows Ghana and Nigeria who both signed MoUs with Volkswagen in August 2018.

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

In Nigeria, Volkswagen undertook to implement a phased approach in relation to the assembly of vehicles initially from assembly kits with long term view of establishing Nigeria as an automotive hub in West Africa.

Schaefer said: “Our Sub-Sahara Africa 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 in the continent, Ethiopia is an ideal country to advance our Sub-Sahara Africa 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 Foreign Direct Investment 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.”