VOLKSWAGEN PLANT TO OPEN IN KIGALI, JUNE 2018

Volkswagen production line at the Kenya Vehicles Manufactures (KVM), Thika, on December 21, 2016.

Rwanda's hopes of having its first vehicle assembling plant will be boosted when German carmaker Volkswagen opens its plant in Kigali by June this year.

“We are looking at opening in the first half of the year. Volkswagen South Africa is continuing with its plans to introduce an integrated mobility strategy for Rwanda that includes an assembly operation. Details will be announced within the next few weeks,” Stefan Mecha, director of sales and marketing at Volkswagen SA, told Rwanda Today.

He said the plant will be located at the Special Economic Zone in Kigali, and will focus on producing at least 1,000 vehicles in its first year of operation.

The plant will primarily assemble a new model of Volkswagen called “Think Blue,” which is said to be environmentally friendly and the electric versions of its VW Golf model.

Last year in September, Thomas Schafer, the chief executive of Volkswagen SA, said the company plans to double production of assembled vehicles annually once the plant is up and running.

The exact cost of the plant will be provided when a team of Volkswagen’s executives visit Rwanda in the coming weeks.

Feasibility study

Last year, the carmaker completed a feasibility study of the project, which Rwanda Development Board said was positive.

Officials at Rwanda Development Board were not available to comment by press time, but the deal is expected to create new jobs and boost the country’s industrial sector.

Volkswagen stands to get a seven-year corporate income tax holiday if it invests at least $50 million — an incentive reserved for investments in the manufacturing, energy, tourism, health and ICT sectors.

Although organisations like ActionAid argue that the country lost revenue through such tax holidays, the government says the incentives will lure more investors, create multiple jobs and lead to economic growth.

Rwanda recorded its largest investment of 2017 in September last year when American firm Symbion Energy signed an investment agreement with the government worth $370 million to develop methane-generated power plant in Lake Kivu.

The East African