Written by Geoffrey Kerosi,
The government of Kenya scrapped off a 20% excise tax for the locally assembled cars. This is a move to attract investors to Kenya. We are expecting to see more locally assembled vehicles. The entry of VW is a proof that the move is already paying dividends.
The first cars to be assembled in Kenya will be Volkswagen Vivo. The production process is expected to start by the end of the year. The agreement to start production was signed between President Uhuru Kenyatta and the VW Group representatives. The Volkswagen Group used to produce cars in Kenya between 1960s and 1970s. The company moved out of Kenya in 1977. This has come after Sameer East Africa decided to close shop in Kenya. The tire manufacturing company cited unfair competition as one of the reasons why they pulled out of Kenyan market.
Volkswagen produces over 42,000 motor vehicles every year. This creates jobs for 610,076 people worldwide. With the entry of VW, we anticipated that the company will create jobs for hundreds if not thousands of Kenyans. In addition to that, this makes a point on what favorable taxation can do for a country.
Let’s hope that the prices of these cars will be affordable. What are your thoughts on this issue?
