Volkswagen starts with local production and innovative mobility services in the Rwandan capital Kigali. The aim is to gain valuable experience for other opportunity markets in the region.
Today, to be mobile in Rwanda’s capital, Kigali, people are looking for either a minibus taxi or a motorcycle taxi. An alternative would be the bus, if there is one coming, but there are usually long queues of people waiting. So far, only a small minority of people living in the metropolitan area own cars. Individual mobility in Rwanda is still at its beginning. And of course, this country of twelve million citizens so far also doesn’t have an established automotive industry.
The fact that Volkswagen has launched its integrated mobility concept in Kigali is a major step towards the future for the country and its people. The project is also an important step for Volkswagen – in testing new business models and opening up new markets in Africa.
The project got off the ground as early as 2016. That was when Hon. Francis Gatare, Director of the Rwanda Development Board, and Thomas Schaefer, CEO of Volkswagen Group South Africa, in the presence of Rwanda’s president, Paul Kagame, and Volkswagen’s CEO, Herbert Diess, agreed on the initiative. “In Rwanda we are launching an idea, with which we want to support individual mobility in this aspiring country and make this market a further pillar of the Volkswagen brand’s commitment in Africa”, Thomas Schaefer said following the talks in Kigali.
Volkswagen counts on partners in Africa
The intention communicated then now becomes a reality. The brand starts new paths in Rwanda: It doesn’t just simply start by establishing a factory, but with a holistic package of local production, a distribution centre, staff training as well as modern and flexible mobility services like car sharing. Not without pride Rwandans hence speak of Africa’s first integrated mobility concept in their country. Within the past 18 months, Volkswagen basically built the Kigali business from scratch. The brand deliberately counts on the know-how of regional partners, because they know best what local people need and expect. From distribution to software development – in all these areas Volkswagen cooperates with African enterprises.
“Rwanda is a young, modern and digital country – and because of that, it is perfectly suited for new, interconnected mobility services”, said Volkswagen Group South Africa CEO, Thomas Schaefer, who is responsible for the sub-Saharan region with its 49 countries. “I’m convinced, that our planned business ideas will be taken up well by our customers. The valuable experiences we are gaining from the mobility services here in Rwanda should in a future step also benefit the Volkswagen brand in other markets.”
Rwanda is the model student in Southern Africa
The vast majority of people still mainly associate Africa with problems. That is despite the continent offering the potential to become a promising market of the future. In the 49 sub-Saharan states alone, there are 920 million people. Until 2050 this number could more than double. At the same time experts predict a significant growth in per capita income.
The young population in Africa (average age: 19 years) wants to move forward and wants to establish something in their countries. Also, the demand for individual mobility is gigantic: While there are about 670 vehicles per 1.000 citizens in Germany, this number stands at only 30 vehicles in Southern Africa.
The potential therefore is huge and African states seem willing, to harness this potential at last. For example, 44 African states in April signed the Africa Free Trade Agreement, which creates a massive free trade zone – an important course-setting on the way to more growth and development.
Rwanda in a way is the model student among the aspiring African states. While the country, which experienced a civil war with gruesome cruelties during the mid-1990s, is still among the poorest in the world, Rwanda’s economic growth for years has been at around seven percent. The political environment is promisingly stable, the government under president Paul Kagame acts decisively against corruption and it worked out an ambitious innovation roadmap for the coming decades.
There is a well-developed road network which is continously upgraded. Statistics show that three quarters of the population have a mobile phone, internet usage is mainly mobile. Especially the capital, Kigali, is inhabited by young and well-trained people, who helped develop the metropolis into a regional start-up centre. Rwanda is strongly committed to become a leader in innovation in Africa.
Sustainable growth in Africa
Volkswagen wants to utilize the chances in Africa and wants to significantly expand its commitment. Other than in Rwanda, Volkswagen is already present in South Africa, Kenya, Nigeria and in Algeria. The sub-Saharan strategy is driven by the Volkswagen Group South Africa. On the long run the plan is to play a leading role in the development of a strong automotive industry on the continent.
People in the region will strongly benefit of this. Volkswagen’s commitment in Rwanda not only creates jobs in production, service and management, but also includes extensive training offers. For this, Volkswagen together with further German companies looks into a cooperation to establish a technical academy. On the long run the aim is to thereby boost employment, know-how transfer and sustainable growth.
Germany’s federal government by establishing its “Marshall Plan with Africa” appealed for a stronger commitment of business in the region. Through its commitment in Rwanda, Volkswagen is among the first companies to decisively heed this call. From Wednesday onward Volkswagen will be a new significant factor on the streets of Kigali.