Volkswagen counts on the Nigerian government as it plans to start manufacturing vehicles in the country

Early July, Chairman and Managing Director of Volkswagen Group South Africa, Thomas Schaefer said the German automaker was ready to produce as much as two million cars in Nigeria as soon as President Muhammadu Buhari approves the automotive industry bill.

“I personally believe that Nigeria is good for 2,000,000 cars per year; with good government policies and collaboration with the industry, this can be achieved,” he said in Abuja at the time. Eight weeks later, he was back in Abuja signing a memorandum of understanding that will make his dream for Nigeria and Africa at large come true.

Scharfer, who wants Volkswagen to start manufacturing cars in Nigeria, with raw materials sourced locally, was part of a business delegation that accompanied Chancellor Angela Merkel when she visited Nigeria last week. The signing of the MoU comes a day after the German company had signed an agreement to set up a vehicle assembly in Ghana.

According to the MoU signed with the Nigerian government, Volkswagen will implement a phased plan that starts with the assembly of vehicles and eventually turning Nigeria into an automotive hub in West Africa. The plan also includes establishing a training academy in conjunction with the German Government. The training academy will provide technical training in automotive skills. Ultimately, Volkswagen would want a comprehensive vehicle and service network developed and maintained in the country once commercial viability is proven. The company currently assembles vehicles in Nigeria through its partnership agreement with a private auto company, the Stallion Group.

As part of the newly signed agreement, the Nigerian Government will accelerate the approval of its automotive policy. Introduced in October 2013, the policy’s objective is to restore assembly and develop local content, thus creating employment, acquiring technology and reducing pressure on the country’s balance of payment.

The Government has also committed to providing a conducive legislative environment that will encourage the manufacturing of vehicles in Nigeria.

“The MoU is a major step in our walk towards the development of the automotive industry to achieve its potential contribution to the continuous economic development of the country,” said Dr. Okey Enelamah, Nigeria’s Minister of Industry, Trade and Investment, who signed for Nigeria.

“We believe in the strategic and catalytic role of the automotive industry in the diversification of the Nigerian economy and we remain committed to encouraging and partnering with relevant stakeholders, especially investors and friends of Nigeria,” he added.

Volkswagen, under its TRANSFORM 2025+ brand strategy, is strengthening the regions and focusing on new up-and-coming markets. Volkswagen says it will keep exploring opportunities for growth and development on the continent.

Thomas Schaefer noted that the agreements in West Africa last week shows the company’s intentions in Sub-Saharan Africa.

“We are well placed to become a dominant player in Africa, as the continent continues to stabilise and develop economically, as the last frontier for the automotive industry,” Schaefer said.

Volkswagen has a fully-fledged manufacturing facility in South Africa. It assembles vehicles in Kenya, Algeria as well as in Rwanda. The company is also in talks with the Government of Ethiopia to explore opportunities for investment in the East African country.