But The General’s Math Does Not Add Up. How Many Rwandans Can Afford the German Automobiles Kagame Has Selected?
By David Himbara
As General Paul Kagame keeps saying, he dreams big. A recent example is his big dream of getting rid of old junk cars on Rwandan roads. Kagame then reached out to Volkswagen South Africa’s MD Thomas Schaefer for a mutual solution. Soon, Schaefer was singing Kagame’s praises. According to Schaefer, Volkswagen was ready to build vehicles in Rwanda
owing to its political stability and zero tolerance for corruption; its economic growth of some 7% a year; the country’s young and tech savvy population; [and] Rwanda’s leadership position in innovation and technology.
And so in 2016, Kagame and Schaefer announced an MOU to build cars in the Rwandan capital, Kigali. The deal was sealed on January 18, 2018 — by May 2018, three VW models will hit Kigali’s and Rwandan roads. The three vehicles are Polo Vivo, Passat, and Teramont. The Kigali VW assembly plant will have an initial installed capacity of building 5,000 vehicles a year. To get the job done, VW will employ up to 1,000 Rwandan professionals to begin with. These will be placed in administration, production, training, sales and service. Some will be deployed as drivers in the car-sharing and ride-hailing scheme – Uber-style.
So, how much does Polo Vivo cost? How about Passat? And Teramont SUV?
These awesome German machines do not come cheap.
A new VW Polo Vivo costs R179,300 in South Africa. That translates into US$14,691. In the Rwandan currency that becomes RWF12,386,850.
The basic VW Passat costs R494 700 in South Africa, which is equivalent to US$40,534 — or RWF34,179,178.
A basic VW Teramont SUV costs over US$50,000 which is equivalent to RWF42,156,188.
Well then – how many Rwandans will afford these vehicles?
Let us look at the Rwandan realities in terms of people with disposable income that might afford to buy VW vehicles. From Rwanda Revenue Authority (RRA), we learn that the number of taxpayers in Rwanda increased from 152,791 at the end June 2016 to 177,564 as of end June 2017. RRA classified the 177,564 taxpayers in 2017 as follows:
- 372 are categorized as large taxpayers, 0.2% of the total;
- 775 are medium taxpayers, 0.4% of the total; and
- 176,417 are small and micro taxpayers or 99.4% of the total of Rwanda’s taxpayers.
In Rwanda, small taxpayers are defined as businesses whose annual turnover is between RWF12 million and RWF50 million (US$14,232 – US$59,302). Micro taxpayers’ annual turnover is less than RWF12 million or under US14,232.
So, General Paul Kagame, if 99.4% of Rwandan taxpayers are “small and micro,” how in the world will they afford to buy VW Polo Vivo at US$14,691? The VW Passat that costs US$40,534 is nearly the same amount as the annual turnover of a small Rwandan business. Forget US$50,000 Teramont SUV!
There is worse news — Rwandan salaries. This is how the 2017 Labour Survey explained wages in Rwanda:
“The average income from paid employment of employees at main job was about 55,934 RFW per month while the median was 20,800 RWF. The national average hourly cash income from employment of employees at main job was 394 RWF per hour. The corresponding values were 228 RWF per hour in agriculture, 529 RWF per hour in industry and 604 RWF per hour in services.”
Dear General, in dollars terms, the average Rwandan monthly income of RWF55,934 becomes US$66. In other words, the average wage earner in the Singapore of Africa makes US$792 a year.
Kagame is confusing his own status with the situation facing other Rwandans
General Kagame, you are doing things the wrong way as usual. Rwandans have to escape poverty first, before they can buy beautiful German machines.
Chief, just because you drive a Germany-built Audi automobile that costs US$65,400, and fly a US$65 million Gulfstream G650 jet does not mean Rwandans can afford a VW Polo Vivo – let alone a Passat or Teramont.