Kenya is back in the business of assembling motor vehicles after Volkswagen South Africa signed a deal with the government to assemble its vehicles in Thika, about 45 kilometres northeast of here.

Volkswagen has signed a deal to use the Kenya Vehicle Manufacturers facility in Thika to assemble popular models beginning with the Volkswagen Vivo and the first fully Kenya-assembled Vivo is expected to roll out of the Thika plant by December this year.

Making the announcement here Wednesday, President Uhuru Kenyatta said the plant would later expand to full assembly operations to producing a range of vehicle makes.

“I am happy to welcome back the Volkswagen Group, currently the largest car manufacturer in the world, back to Kenya,” said President Kenyatta at State House Nairobi, where he witnessed the signing of the agreement between the Kenyan government and Volkswagen.

The German automaker used to operate in Kenya from the1960s until 1977 and used to assemble Volkswagen vans, micro-buses and the famous Kombi multi-purpose vehicle.

President Kenyatta said the return of Volkswagen was a sign of the economic transformation Kenya had undergone. He said the venture would create jobs for many Kenyans.

“This is a milestone in my administration’s determined push to grow the manufacturing base and transform Kenya into an industrialized nation. We are in the early stages of transformation,” said the Presidentm who added that the development was proof of the success of the four initiatives the government had focused on to transform Kenya.

The areas of focus include investments in infrastructure, including rail, roads and energy.

“This is being welcomed by major investors such as Volkswagen who realize that Kenya is now a more competitive investment destination, and are responding by pursuing opportunities here,” the president said.

The second area of focus is the reforming of the regulatory and business environment under the Ease of Doing Business Programme. The third area the government has put emphasis on is to grow effective linkages between foreign direct investment and local enterprises

“Whenever I travel out of Kenya, it is always with an eye to making concrete steps to increase investment by showing the world the huge opportunities available here at home,” said the President.

The Head of State said the hosting of major conferences in the country has also allowed a critical mass of global investors to see what Kenya has to offer.

The President said the fourth area the Government had invested in was the improvement of human resources competitiveness.

He said attracting world-class companies like Volkswagen provided a lure and anchor to other investors.

Volkswagen South Africa Chief Executive Officer Thomas Schafer said the company was excited to be back in Kenya, which had a huge potential to be a vehicle-exporting country to serve the wider East Africa sub-region.

“The Volkswagen Group is excited to be here and we will start operations immediately,” he said.