Another Company Shuns Nigeria, Builds Auto Assembly Plant in Egypt
- A contract has been signed by Volkswagen Group Africa and the Egyptian government
- This is to build and operate a new assembly and body shop in the country
- This comes at a time when the Nigerian Volkswagen assembly line has been idle for some years
Legit.ng journalist Zainab Iwayemi has over 3-year-experience covering the Economy, Technology, and Capital Market.
The Egyptian government and Volkswagen Group Africa have inked a deal to construct and manage a new body shop and assembly factory in the East Port Said Automotive Zone (EPAZ).
Source: Getty Images
This choice is a significant departure from the original strategy that positioned Nigeria as a possible location for the carmaker's assembly factory.
The new Volkswagen-Egypt agreement was made at a time when Stallion Motors' Volkswagen assembly line in Nigeria had been idle for several years.
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The Stallion Motors-owned Volkswagen showroom in Victoria Island, Lagos, is mostly vacant and has not seen a new model introduced in the area in several years.
Experts stressed during the recent Nigeria Auto Industry Summit in Lagos that the Nigeria Auto Industry Development Plan, which has been approved by the Federal Executive Council but has not yet been signed into law, is essential to advancing the nation's automotive industry.
Charles Abuede, a financial analyst, however, noted that the depicted scenario is indicative of various interconnected factors.
He added,
"Notably, the challenging business environment in Nigeria, characterized by unfriendly conditions due to multiple taxation issues, poses a significant obstacle to ease of doing business."
According to Daily Trust, Nigeria has been dragging its feet on the auto policy Bill for the past ten years, which has caused many original equipment manufacturers (OEMs) to abandon their plans to establish assembly plants there because there is no auto policy to protect their investment.
Meanwhile, Egypt unveiled the Automotive Industry Development Programme (AIDP) in June 2022 to boost investment, local value addition, vehicle production, and emission regulations.
After a successful feasibility study, the Egyptian government intends to create a Special Purpose Vehicle (SPV) to develop the Body Shop and Assembly Line buildings, which Volkswagen Group Africa will use to make automobiles for the Egyptian market.
India’s steel company to leave Nigeria
Legit.ng reported that Indian steel manufacturer Aarti is quitting Nigeria's manufacturing sector, joining a lengthy list of corporations that have left the nation due to economic hardships.
BusinessDay has reported that large parties have already placed tentative bids ranging from $50 million to $100 million for the Ota, Ogun State-based steel manufacturer, which has previously been put up for sale.
Following Microsoft Nigeria, Total Energies Nigeria, PZ Cussons Nigeria PLC, Kimberly-Clark Nigeria, and Diageo PLC out of the most populous country in Africa, this will make it the sixth giant business to leave Nigeria in the first half of 2024.
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