On Friday, Head of the Volkswagen Sub-Saharan Africa Region, Thomas Schaefer, signed a Memorandum of Understanding (MoU) with Abebe Abebayehu, the Commissioner of the Ethiopian Investment Commission.

The project is going to be focusing on four key areas — the establishment of a vehicle assembly plant, the opening of a training plant, localization of automotive components, and the introduction of mobility concepts such as app-based car sharing and ride hailing. On top of that, the company is going to be working closely with the higher education institutions of the country to help with skill development and capacity development of local talent.

When asked about the initiative Thomas Schaefer stated, “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-Saharan Africa development strategy. Additionally, Volkswagen intends on tapping into existing expertise and strategic resources in Ethiopia to help to establish a thriving automotive components industry.”

This isn’t the first time that Volkswagen has worked in developing countries.  Ethiopia is actually the third country in the region to sign an MoU, coming after Ghana and Nigeria. According to Automotive World, they’ve actually been using the region for automotive assembly since 1951. Within Africa, Volkswagen has done similar moves with Algeria, Kenya and Rwanda. Volkswagen clearly understands how the region operates and that they also comprehend that the region needs some foreign investment to get on its feet.

If successful, these areas might become an automotive hub, which would make it a new market for Volkswagen to sell their products, which will already be well ingrained into the nation and prepped for production. In other words, they can start selling and producing vehicles right away rather than having to wait for facilities to be built alongside other manufacturers.

Ultimately, this is good for the country since it is the fastest growing economy in the region, but according to the World Bank it only has a per capita income of $783. However, this number could very well increase with the higher paying opportunities of employment that these new facilities will bring along with them.

This certainly translates to good news for both Ethiopia and Volkswagen, along with other countries on the continent. And while the long-term strategy is overall positive, this is not something that will happen overnight.

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