Volkswagen Rolls Into Rwanda

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By CultureBanx Team

  • Rwanda has only registered 200,000 private cars since 1997
  • Volkswagen will spend around $20 million in Rwanda and create 1,000 jobs

German carmaker Volkswagen (VLKAY -1.00%) just launched its first car built in Kigali, Rwanda. The new assembly plant at Kigali’s Special Economic Zone is the first of its kind in the country. Is Volkswagen making a substantial contribution to the country’s economic development?

Why This Matters:  Car ownership remains pretty low in Rwanda with just over 200,000 private cars registered since 1997, according to the country’s tax collection body. Volkswagen’s plans for Rwanda started with their Integrated Mobility Solutions strategy which includes local vehicle assembly, innovative mobility services along with a sales and service retail outlet.

President Paul Kagame, who is also the chairman of the African Union, joined the campaign to reduce importation of used cars on the continent. Used vehicles are a leading cause of pollution and are also expensive to maintain. “This facility undoubtedly represents a new chapter in Rwanda’s journey of economic transformation,” said President Kagame.

Volkswagen plans to build up to 1,000 vehicles per year depending on demand and the success of the mobility fleet, with an annual production capacity of up to 5,000 units. The company will spend around $20 million in Rwanda for phase one which will create up to 1,000 jobs.

It’s not just Rwanda that’s caught the eye of international automakers, Kenya has as well. Nissan (7201.T -0.76%) plans to invest at least $100 million in a light pick-up truck assembly plant in Kenya. Nissan sales in Africa increased 11.7% in Q3, totalling 70,000 units.

Situational Awareness: The brand will expand its engagement in Africa and its long-term goal is to play a leading role in the emerging automotive industry. In addition to Rwanda, Volkswagen is already active in South Africa, Nigeria, Kenya and Algeria. Currently, South Africa has been leading the industry on the continent for decades, but proposed changes to its development policy endanger this status.

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CultureBanx Team

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