KAMPALA (Reuters) - Uganda is aiming to start assembling new vehicles by June 2022, with an initial production capacity of 5,000 units per year, a top official of the state-owned Kiira Motors Corporation (KMC) told Reuters on Monday.

The East African country joins other regional countries including Rwanda and Kenya that are at various stages of developing domestic auto industries to meet growing demand for new vehicles. Last year German carmaker Volkswagen VOWG_p.DE launched Rwanda's first locally assembled car at its new factory in Kigali, with Europe's biggest carmaker hoping to tap into an expected expansion in demand for ride-sharing in the region.KMC Chief Executive Officer Paul Isaac Musasizi said in an interview that the firm started construction early this year of the first phase of its production plant in Jinja, eastern Uganda."The plan is to have the initial phase completed and commissioned by end of June 2022... we should be in the market with our product by then," he said.

The Ugandan government has provided $40 million to fund the firm’s operations up to June 2022 beyond which KMC plans to sell stakes to private equity investors to raise extra funds to finance further expansion.

KMC will start with production of buses of various sizes to meet the demand for passenger transportation. Eventually, the firm hopes to expand to manufacturing trucks.

Car manufacturing efforts in the region have long been hobbled by imports of cheaper secondhand cars mainly from Asia.New vehicle sales in East Africa average less than 15,000 out of a total of 200,000 sold annually.

Musasizi said a range of factors including healthy economic growth rates, a large and growing population and technological innovations that could bring down production costs will help support a sizeable domestic market for new cars.

KMC is collaborating with China’s state-owned China Hi-Tech Group Corporation (CHTC) which specializes in manufacturing of a range of products including textile machinery, commercial vehicles and others.

“They are providing us with technical capacity,” Musasizi said, adding CHTC was helping to train a group of Ugandan engineers in China.