KIGALI – More than 20 years ago, Rwanda faced one of the bloodiest conflicts of the decade. Today, however, it enjoys political and economic stability. This small African nation has recently attracted the investment of one of the world’s largest automobile manufacturers: Volkswagen. The hope behind this investment is that it will help attract even more investments and possibly create new jobs in Rwanda.
Rwanda at a Glance
According to the CIA, 39 percent of the Rwandan population was living below the poverty line in 2015. Although these levels are still high, they are at almost half of what they were in 2006, when more than half of the population lived below the poverty line.
Because of the political and economic instability caused by the Rwandan genocide, the country struggled to attract foreign investors and job creators in the past. Rwanda has since stabilized, reaching annual growth rates that are far better than they were even before the conflict.
In the last few years, Rwandan leaders have been active in promoting their home as a perfect investment opportunity. This included launching an online system in 2016 that offered potential investors information about available land for agriculture as well as a modern Special Economic Zone available to all industries.
A Promising Turnaround
The effects of the genocide were vast. Since 1994, The government in Rwanda has been working hard to rebuild the economy. One example of decline was in Rwanda’s coffee exports. In 1986, Rwanda exported 42,000 tons of coffee. During the conflict, coffee workers were either murdered or they abandoned their jobs and fled the region. By 2003, the country was only exporting only 14,000 tons of coffee per year.
USAID notes that now, after two decades of instability and low growth, the future is looking brighter for Rwanda. The Government of Rwanda has been successful in their efforts to boost the economy and reform the financial and business sectors. In fact, the country increased its rank from 139 to 62 on the annual World Bank Doing Business Report. A continued consistent growth in Rwanda’s biggest sectors “will be critical for economic development and poverty reduction.” This nation has been working hard and is finally starting to see its work pay off.
“Made in Rwanda:” Jobs in Rwanda and Cars for Rwandans
In June 2018, Volkswagen launched a brand-new assembly plant located in the Kigali Special Economic Zone. This is Rwanda’s first international automobile investment. The plant is capable of producing almost 5,000 cars, but it will start off by producing 1,000 in the first year. Each car requires at least 20 workers to build it. These cars are built by Africans for Africans, as part of Rwanda’s “Made in Rwanda” campaign. The investment is worth $20 million and will create 1,000 jobs.
Economic Analyst Kenneth Agutamba is optimistic that this investment will attract more foreign investments as it is proof for other corporations that Rwanda is now a safe bet. “The fact that Volkswagen took time to study Rwanda and found it a good business case we can invest in here, means a lot for us,” says CEO of the Rwanda Development Board, Clare Akamanzi. Akamanzi has high hopes that other companies will follow suit and bring their business to Rwanda.
A Model For Success
Volkswagen investments have made lasting impacts in other rural communities. Almost a decade ago, Volkswagen announced plans to build a factory in Chattanooga, Tennessee. Initially, the company promised to invest an estimated $1 billion in the southern city, along with the creation of 2,000 jobs. Once the factory was up and running, it assembled 800,000 vehicles, created 3,000 jobs and invested $2.3 billion.
“Over the last 10 years,” notes Chattanooga Mayor Andy Berke, “Volkswagen [has been]helping to create stronger neighborhoods and grow our economy through job creation and vocational training opportunities.” It’s impossible to say if Chattanooga’s huge success could be replicated in Rwanda. They are two very different cultures with different histories, but the potential for growth and success is certainly there.
Rwanda has a difficult past and many Rwandans still face extreme poverty. These people have faced seemingly insurmountable odds, but the Volkswagen investment is proof that the country has come out of the shadow of the 1994 conflict bolder and stronger. If the plant operates smoothly, the country will enjoy more economic opportunities and see many new jobs in Rwanda
– Sarah Stanley