Aim is to become a leading manufacturing hub in Africa.

The government of Ethiopia aims to boost the country's image as a hub for the auto industry. The country currently has annual production of about 8,000 commercial and other vehicles in the market, of which about 25% are passenger cars, reports Reuters. But the automakers present in the country claim they have capacity to lift local production. In 2015 a total of 38,000 cars were imported into Ethiopia, around 50% up from 2014, the report claims. Automakers such as China's Chongqing Lifan want to use their base in Ethiopia to export models to other markets. "We want to start exporting from Ethiopia by 2018," Ma Qun, deputy manager of Lifan Auto in Ethiopia is quoted as saying. The government aims to be a leading producer of vehicles in the continent. "The aim is to become a leading manufacturing hub in Africa," Tadesse Haile, state minister for industry in Ethopia is quoted to have said, adding, "We want to become the top producer of cars on the continent in 15 to 20 years."

Significance: The Ethiopian government has keen plans to develop the country as a major automotive hub in the region. For this Chinese vehicle makers present in Ethiopia say they need financial support to help bring in more kits for assembly in the country. The issue relates mainly to the constraints in accessing dollars. "For example, if we apply for USD 500,000 for a month's shipments, the bank will give us USD 200,000 for two months," says Ma from Lifan. The government aims to improve the conditions relating to its foreign exchange reserves. Lifan opened its plant in Ethiopia in 2014. So far our forecasts estimate that the main production hubs in Africa will be Algeria, Egypt, Morocco, Nigeria and South Africa, while the largest sales markets are South Africa, Algeria, Egypt, Morocco and Nigeria.

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