Since the 1970s, Ethiopian taxis have predominantly been Russian-made Ladas, and now AvtoVAZ and GAZ Group are targeting Ethiopia for expansion.
They plan to build and sell popular car models locally. Company heads visited Ethiopia and toured local factories.
They liked what they saw, especially the benefits of Ethiopia’s Dire Dawa Free Trade Zone.
Maxim Sokolov, the CEO of AvtoVAZ, has big plans. He aims to ship 20,000 cars to various African countries by 2023.
Meanwhile, top officials from both countries have been talking. They’re discussing both cars and cooperation in mining, energy, and other sectors.
This falls under Russia’s broader “Sanctions Road Initiative.” The initiative aims to set up cost-effective operations in Africa.
Trade between Russia and Ethiopia is already strong. In 2022, their combined trade turnover reached $18 billion.
Ethiopia mainly exports coffee to Russia. In return, it imports wheat, oil, and paper products.
Long-lasting diplomatic ties make this venture promising. Russia once forgave a $162 million debt for Ethiopia.
The African country is also part of the BRICS group, likely bringing in more Russian money.
Experts in Ethiopia see this move as brilliant. Building cars locally will reduce Ethiopia’s import costs.
It also meets an apparent demand for affordable cars in Ethiopia and nearby countries. The Dire Dawa Free Trade Zone is another big draw for Russian companies.
In summary, Russia is turning its focus to Ethiopia for automotive production. Both countries stand to benefit.
This move could mark a new chapter in the relationship between Russia and Ethiopia.
Background
Russian companies’ push for car manufacturing in Ethiopia is part of a longstanding relationship.
Russia and Ethiopia have been diplomatic partners since the 19th century. Over the years, their relationship has shifted from political alliances to economic cooperation.
Ethiopia’s membership in the BRICS group signifies its growing economic influence and aligns with Russia’s broader interests in Africa.
This move also speaks to Ethiopia’s growing industrial ambitions. Ethiopia aims to become Africa’s manufacturing hub by 2025.
Having Russian car production locally aligns with this vision. Additionally, this could boost Ethiopia’s employment rates and contribute to economic diversification.
Historically, Russia’s focus on Africa dates back to the Soviet era. The USSR was actively involved in Africa, supporting various liberation movements.
This has transformed into economic engagements like the “Sanctions Road Initiative.”