German automaker Volkswagen is quickly establishing its presence in Africa as it continues to seek pastures new in the continent.
The car manufacturer recently signed a Memorandum of Understanding (MoU) with the Ethiopian government, a market it has targeted since late last year.
The MoU was signed by Thomas Schaefer, Head of the Volkswagen Sub-Sahara Africa Region and Commissioner of the Ethiopian Investment Commission (EIC), Abebe Abebayehu, 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 agreement will see Volkswagen and Ethiopian Government work together to develop the automotive industry in the East African nation.
According to a 2014 Deloitte report, Ethiopia has the world’s lowest rate of car ownership, with only two cars per 1,000 inhabitants.
However, with its economic growth, it offers a business investment opportunity to the German manufacturer.
Ethiopia became the third Sub-Sahara African country to seal the deal with Volkswagen, following the footsteps of West African countries Ghana and Nigeria who signed a similar agreement in August 2018.
“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,” Schaefer said.
“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,” he added.
Already Volkswagen has established its presence in Kenya and Rwanda as well, with the latter unveiling its first Made-in-Rwanda VW vehicle last year.
The car dealer opened up an assembling plant in Algeria looking to write a success story in Africa.
Ethiopia’s performance in FDI inflow is positioning itself as a preferred investment hub in Africa, stiffening competition with other African nations.
The MoU signing with Volkswagen is another testimony that Ethiopia is open for business.