Russian automakers are eyeing East African assembly plants

Russia's automakers are looking to Africa for cost-effective operations as the Russian 'Sanctions Road Initiative' expands its pathways away from Western influence.  According to Evgeny Terekhin, Moscow's Ambassador to Addis Ababa, Ethiopia, numerous Russian automakers are considering Ethiopia as a potential location for an assembly facility.

The intention was made public following discussions last week between Russian State Duma Chairman Vyacheslav Volodin and Ethiopian House of Federation Speaker Agegnehu Teshager, during which the two sides discussed economic cooperation. "Ethiopia is an important Russian partner in Africa. We have always engaged in such discourse with Ethiopia, and our connections have lasted over 125 years." Volodin stated.
In areas like mining, energy, transport, construction, and agriculture, he mentioned that Russian businesses are interested in long-term collaboration with Ethiopian partners. He also emphasised how trade between Russia and African countries has been expanding, with a combined turnover expected to reach US$18 billion in 2022.
African nations mostly sell fruits, vegetables, tea, coffee, flowers, and rare woods to Russia, with coffee accounting for the lion's share of Russian imports from Ethiopia and wheat accounting for more than half of Russia's exports to the country in 2022. Russia also supplies oil and paper to Ethiopia.
The interest in Ethiopia is intriguing, especially given Moscow's desire for port access and a future Red Sea naval station. Russian plans for Port Sudan have been postponed, implying that interest in Djibouti as an export base is increasing. China, which has a naval station in Djibouti, will back Russia's regional trade and investment initiatives.
Automobile production in Ethiopia would provide Russian manufacturers with access to markets outside Russia and the EAEU, including the Middle East, East Africa, and South Asia.
Vehicle usage in these regions is likely to rise dramatically as economic prospects improve, and Russia has been particularly active in promoting African countries to join the BRICS and EAEU in reciprocal trade incentives. If the labour force is suitably skilled, the Ethiopian assembly would give a useful margin of price competitiveness.
Due to colonial hangovers and opposition to Western foreign policy in the area, European firms have found it difficult to access African markets. In addition, African states agreed in 2021 to the African Continental Free Trade Agreement (AfCFTA), which eliminates tariffs on intra-African commerce, making sourcing and exporting considerably easier and more competitive.

Posted on : 21 Jul,2024 | News Source :

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