There are nine million Toyotas in Kigali 🎵

I haven’t counted them all but I would estimate that at least 90% of vehicles are made by the Japanese manufacturer. From military vehicles to buses to NGO-branded 4 x 4s to the ever-present Corolla. All of which got me wondering two things:

  • WHY??
  • When, if ever, will we see an African-owned car manufacturer launch an affordable vehicle for the masses?

Because I don’t think about cars much at all (apart from with regards to avoiding being run over) it took a while before I noticed this. Once I did, I began to ask people.

It is a cheap car

Turns out that Toyota is a cheap car brand. This has been everyone’s explanation. That, and that Toyata’s are the only parts available in Rwanda. Apparently you could take a clapped-out Corolla and have all the parts replaced so it was as-new within a single afternoon and it would cost you little more than £100.

Whereas if you are among the upper echelons of Kigali car owners driving around a BMW and you have a faulty doodad you’d apparently have to order a replacement from Europe and wait three weeks for it to arrive at great cost and inconvenience.

I’m sure this explanation is true, but I don’t find it satisfying. There must surely be other cheap car brands. Why Toyota? And it can’t always have been like this – when did this start?

The relationship between Japan and Rwanda

Ducking down the conspiracy rabbit hole for just a second, I wondered whether there could be any answers in the relationship between Japan and Rwanda.

Just last weekend I went to a modest exhibition of Japanese photography that was book-ended with glossy information about the contribution of Japan International Cooperation Agency to Rwandan development. Japan has provided investment for projects ranging from irrigation, to energy, to vocational training, to improving the quality of Rwandan television programming. Japanese official development assistance has increased year on year, up to $32.79 million in 2012. There is even a volunteering programme similar to VSO or Peace Corps.

While it was interesting to learn about, I am assured by people who understand these things that while a good diplomatic relationship can grease the wheels for trade between countries, it certainly doesn’t explain the queues of Toyotas I weave through on my way to work each morning.

It is true, however, that Japanese private sector firms, including Toyota Tsusho Corporation,  are the most prominent in investing in Rwanda, particularly in the IT infrastructure that the Government has prioritised to enable transition to a knowledge-based middle income economy.

Still, that doesn’t explain the ubiquity of Toyota. I reluctantly am packing away my tinfoil hat. Back to money I guess. But why is Toyota the only car most Rwandans can afford?

Money talks

I am told that Rwanda has very high taxes, especially on imported goods (someone was arguing to me that this is a growth inhibitor for anyone wanting to set up a business here that requires sourcing raw material or tech from outside). Tax on imported cars is something like 40%. Essentially, that means 40% tax on all cars, since Rwanda doesn’t make any cars (more on that later).

So it stands to reason that if Toyota is the cheapest, that it will remain the most, perhaps only, accessible brand for most people.

It’s not just Rwanda, either. It’s statistically the world’s best selling car.  There are tons of Toyotas across East Africa and probably beyond. Also across the Middle East. They are also favoured by militant and terrorist groups including the tragic people who call themselves ‘Islamic State’.

But why isn’t there an affordable African car brand?

This is the bigger question. Africa is a huge continent, with millions of bright entrepreneurial minds (see the founders of Dangote, Jumia, MTN) and a growing middle class. It has raw materials in spades and it has a huge and growing workforce.

If there was an African-owned vehicle manufacturer that offered affordable vehicles, made at African sites employing African workers, for Africans who would not have to pay for the costs (financial, environmental) of bringing cars from Europe and Asia, would it not hoover up the market?

I think it would. The question of why that has not happened, and if it ever will, is huge and deeply intertwined in a larger debate about the unfair disadvantage less developed African nations are in, just because economic growth took off in other parts of the world earlier. (I found answers to why countries took off in different ways, at different times, in Jared Diamond’s excellent book Guns, Germs and Steel. Short answer: geography).

When the system is stacked against you

Of course. for cars to be affordable to the masses they have to be produced affordably at a mass scale, which is the stage the leading car brands of Europe, the US and Asia are at. There are about 80 million cars sold each year, and there must be just a tiny handful of people at the helms of the companies that make the well-known brands.

Since Western markets are more mature/sluggish, the bulk of profit in the car business in coming decades is going to come from developing nations.

Do you think those companies that own the market today would want to miss out on this opportunity? No. Which is logical, in the globalised capitalism we have today.

But it comes at the expense of any locally-owned private sector companies growing off the back of African economic development and contributing to boosting their home countries’ GDP and thus cash for the state to spend on essential services and infrastructure.

That our current economic system benefits those countries who got to the table first is clear. It may not be deliberate, but neither is it fair. Policies could and must be put in place to redress the completely unacceptable inequalities caused.

There ARE African car brands, you just don’t know about them

South Africa is the only African country making cars in any significant numbers, though mostly cars are built for foreign brands such as Toyota (hello again), Volkswagen and BMW.

But there are African-owned car brands making cars. Though all of them are very much in the early days phase and at low production capacity, there are names out there including Innoson (Nigeria, calling itself ‘world’s first black owned car manufacturer), Kiira (Ugandan hybrids, not yet in production) and Kantanka (Ghana).

IVM2.jpg
Innoson cars for sale in Nigeria. They supply police and secret service vehicles and announced an affordable model for lower income Nigerians in early 2016.

I imagine these companies face challenges of reaching operational efficiency, and in accessing finance and technology that could make their products competitive. I also think that if they could do so, and if the playing field was somehow levelled, they would enjoy great support, as do the other successful Africa-born businesses mentioned.

In the meantime, it’s Toyotas all round. No conspiracy, just a reminder of an economic challenge that African nations are tempering with ambition, optimism and hope.

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