East Africa: Volkswagen Escaped Bureaucracy in Tanzania, Went to Rwanda, Says Former Minister

Rwandan Prime Minister Edouard Ngirente joins other officials at the launch of the e-Golf in Kigali.

Dar es Salaam — A former cabinet minister in Tanzania, Charles Kitwanga told the parliament on Wednesday November 6 that Europe's biggest carmaker, Volkswagen, decided to invest in Rwanda after attempts to set up a car assembly in Tanzania failed due to 'deep-rooted bureaucracy.'

Tanzania is building the base for an industrialized economy. Finance Minister Dr Philip Mpango on Tuesday said the country is working on streamlining economic growth through improving the business climate and implementing the overall development plan.

But, Mr Kitwanda, who formerly led the Home Affairs docket, urged the current administration to urgently address bureaucracy to attract more investors as the country gears for industrialization.

"The bureaucracy we have in our system is so bad... Volkswagen [vehicles] are now made in Rwanda, they were to be assembled here [in Tanzania]," said Mr Kitwanga as he addressed the House in Dodoma.

Last year, Rwanda's first domestically built car rolled off the assembly line at Volkswagen's new factory in Kigali, reported Reuters news agency. Volkswagen seeks to capitalize on the demand for its vehicles to expand in the region.

Mr Kitwanga says he wasn't happy with the fact that a neighboring country is making strides on a business that should have been put up in Tanzania.

"I brought them [Volkswagen] here. I am told now they are now investing in electric cars in Rwanda," said Mr Kitwanga, referring to latest developments where Volkswagen is demonstrating electric vehicles in Kigali.

"I can assure you that if an investor puts up a factory here [in Tanzania], he/she cannot take it away, it will always be here," said Kitwanga.

In the latest World Bank 'Doing Business 2020', Rwanda maintained its position as the leading country in East Africa on the ease of doing business.

Tanzania and Uganda came a distant 141 and 116 globally respectively while DR Congo and South Sudan are near the bottom ranking 183 and 185 respectively, out of the total 190 in the index. This places them third fourth fifth and sixth respectively in the region.

Indicators that make Rwanda top include starting a business which has been made easy by exempting newly formed small and medium-size enterprises from paying the trading license tax for their first two years of operation.

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