Ammo is not particularly difficult to manufacture from scratch even for a poorly industrialized nation. It isn’t a high tech process.
Less with generic 7.62, but 5.56x45mm NATO is terribly hard to machine and load to the specifications of the M-16. The propellant has to be formulated to rigid specifications and exact amounts, or the machine gun is very prone to misfire and jamming.
It is a fickle weapon at best, and I suspect that it was done precisely to prevent M-16s or their ammo from proliferation.