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 African Business Network 35
diversify the export basket, and can bring in much needed foreign exchange.
An enlightening example comes from Vietnam. In Vietnam, 86% of households have a motorcycle (compared to 13% in Uganda). The Vietnam motorcycle industry was virtually inexistent in 1995, when all motorcycles were imported. Foreign  rms then started producing in Vietnam to sell in the domestic market, and Vietnamese  rms joined in.
Motorcycle production now employs about 20,000 workers as well as tens of thousands in support industries and related services. The industry can meet domestic demand for normal motorcycles with a capacity of up
to 125cc, and the major foreign motorcycle makers in Vietnam started to export their production surplus to other markets.
This has generated positive outcomes from Vietnam: besides generating employment, Vietnamese motorcycles and parts companies have learnt new skills, diversi ed their products and exported US$500 million worth of motorcycles in 2014 alone.
The Vietnam case is not unique. Many
other countries built up manufacturing industries by  nding their niche. East Africa can follow Vietnam’s example, starting from motorbikes and expanding their capability to operate in other sectors.
With a very young population and the need to attract good-quality jobs, East Africa needs to develop a manufacturing sector. Tax waivers can only go so far in supporting
the development of manufacturing.
East African governments will need to provide better infrastructure and improved access to electricity, to ensure that more and more companies can thrive in the East African manufacturing sector.

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