Future of the South African Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2023
Summary
South African military expenditure, which stands at US$3.9 billion in 2018, declined at a CAGR of -0.62% during 2014-2018. However, it is anticipated to register a CAGR of 4.80% over the forecast period, to value US$4.9 billion in 2023. As a percentage of GDP, the country’s defense expenditure is expected to average 1.1% over the forecast period. The country is an active participant in stability and peacekeeping operations governed by the UN (United Nations), African Union, and the Southern African Development Community (SADC), and, as such, seeks higher expenditure for the defense sector.
Although the South African defense market is relatively small, many foreign companies enter the country with the aim of establishing manufacturing facilities that will cater to their global supply chain. In turn, South African companies receive technology transfers and funding for expansion and product innovation. Saab AB, an aerospace and defense company based out of Sweden, and Rheinmetall AG, an automotive and defense company based out of Germany, are examples of foreign manufacturers that have entered into joint ventures in order to enter the South African defense market.
Furthermore, as the South African Government to replace its aging military equipment and improve border security and surveillance, which are further expected to drive defense expenditure, many foreign defense companies, such as Boeing and Thales, have entered the market by offering technologically advanced weapons as part of technology transfer agreements.
The Future of the South African Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2023, provides readers with detailed analysis of both historic and forecast defense industry values, factors influencing demand, the challenges faced by industry participants, analysis of industry leading companies and key news.
In particular, the report provides an in-depth analysis of the following -
- The South African defense industry market size and drivers: detailed analysis of the South African defense industry during 2019-2023, including highlights of the demand drivers and growth stimulators for the industry. It also provides a snapshot of the country’s expenditure and modernization patterns
- Budget allocation and key challenges: insights into procurement schedules formulated within the country and a breakdown of the defense budget with respect to capital expenditure and revenue expenditure. It also details the key challenges faced by defense market participants within the country.
- Import and Export Dynamics: analysis of prevalent trends in the country’s imports and exports over the last five years.
- Market opportunities: list of the top ten defense investment opportunities over the next 5 years.
- Competitive landscape and strategic insights: analysis of the competitive landscape of the South African defense industry.
Companies Mentioned: Denel, Ansys Limited, Reutech, Saab Grintek, IVEMA, Aerosud, Global Armour, Milkor (Pty) Ltd, Paramount Advanced Technologies, Tellumat Defense.
Scope
- South African military expenditure, which stands at US$3.9 billion in 2018, declined at a CAGR of -0.62% during 2014-2018.
- However, it is anticipated to register a CAGR of 4.80% over the forecast period, to value US$4.9 billion in 2023.
- The country is an active participant in stability and peacekeeping operations governed by the UN (United Nations), African Union, and the Southern African Development Community (SADC), and, as such, seeks higher expenditure for the defense sector.
- The country also seeks to replace its aging military equipment and improve border security and surveillance, which are further expected to drive defense expenditure over the forecast period.
- As a percentage of GDP, the country’s defense expenditure is expected to average 1.1% over the forecast period.
Reasons to buy
- This report will give the user confidence to make the correct business decisions based on a detailed analysis of the South African defense industry market trends for the coming five years
- The market opportunity section will inform the user about the various military requirements that are expected to generate revenues over the forecast period. The description includes technical specifications, recent orders, and the expected investment pattern by the country over the forecast period
- Profiles of the top domestic and foreign defense manufacturers. This will provide the user with a total competitive landscape of the sector
- A deep qualitative analysis of the South African defense industry covering sections including demand drivers, key trends, and latest industry contracts
Table of Contents
1. Introduction
1.1. What is this Report About?
1.2. Definitions
1.3. Summary Methodology
1.4. About Strategic Defense Intelligence
2. Executive Summary
3. Market Attractiveness and Emerging Opportunities
3.1. Current Market Scenario
3.1.1. Primary Threat Perception
3.1.2. Military Doctrine and Strategy
3.1.3. Military Fleet Size
3.1.4. Procurement Programs
3.1.5. Top procurement programs by value (US$ million) 2018-2023
3.1.6. Social, political and economic environment and support for defense projects
3.1.7. Political and strategic alliances
3.2. Defense Market Size Historical and Forecast
3.2.1. South African defense expenditure expected to grow at a CAGR of 4.80% over the forecast period
3.2.2. Modernization initiatives, peacekeeping missions, and border security to drive defense expenditure
3.2.3. Military expenditure as a percentage of GDP is anticipated to increase over the forecast period
3.3. Analysis of Defense Budget Allocation
3.3.1. Capital expenditure share to remain constant over the forecast period
3.3.2. Capital expenditure anticipated to increase at a CAGR of 5.47% over the forecast period
3.3.3. ‘Other defense’ accounted for the largest percentage share of the overall defense budget
3.3.4. Army expenditure to grow at a modest pace over the forecast period
3.3.5. Per-capita defense expenditure expected to increase over the forecast period
3.4. Homeland Security Market Size and Forecast
3.4.1. Homeland security expenditure to grow at a CAGR of 4.36% over the forecast period
3.4.2. Homeland security expenditure to be driven by the rising threat of global terrorism and high violent crime rates
3.4.3. South Africa faces a ‘high level’ of threat from foreign terrorist organizations
3.4.4. South Africa has a score of 4.1 on the Terrorism Index
3.4.5. South Africa has a terrorism index score of 4.1
3.5. Benchmarking with Key Global Markets
3.5.1. South African defense expenditure expected to remain low compared to leading spenders
3.5.2. The country will continue to be a small player in the global defense market
3.5.3. South African defense expenditure as a percentage of GDP is lower than the majority of leading defense spenders
3.6. Market Opportunities: Key Trends and Growth Stimulators
3.6.1. Top 10 defense market categories by value (US$ million) - forecast-period projections
3.6.2. Infantry Fighting Vehicles:
3.6.3. Land-based C4ISR
3.6.4. Transport Aircraft:
4. Defense Procurement Market Dynamics
4.1. Import Market Dynamics
4.1.1. Defense imports expected to remain constant over the forecast period
4.1.2. Russia dominated South Africa’s defense imports during 2013-2017
4.1.3. Satellites were the main defense import during 2013-2017
4.2. Export Market Dynamics
4.2.1. Defense export value declined significantly during 2013-2017
4.2.2. The UAE held the largest share of South African defense exports during 2013-2017
4.2.3. Armored vehicles accounted for the majority of country’s defense exports
5. Industry Dynamics
5.1. Five Forces Analysis
5.1.1. Bargaining power of supplier: Low
5.1.2. Bargaining power of buyer: Medium
5.1.3. Barrier to entry: Medium
5.1.4. Intensity of rivalry: High
5.1.5. Threat of substitution: Medium
6. Market Entry Strategy
6.1. Market Regulation
6.1.1. Offset policy ensures support for local companies
6.1.2. Declining foreign direct investment inflows impact business environment
6.2. Market Entry Route
6.2.1. Budgeting Process
6.2.2. Procurement policy and process
6.2.3. Foreign OEMs find alternative routes into the market
6.2.4. Joint ventures and collaborations provide market entry opportunities
6.3. Key Challenges
6.3.1. Corruption and bribery
6.3.2. Lack of transparency
6.3.3. Lack of relevant defense policy
7. Competitive Landscape and Strategic Insights
7.1. Competitive Landscape Overview
7.2. Key Public Sector Companies
7.2.1. Denel: Overview
7.2.2. Denel: Major Products and Services
7.2.3. Denel: Recent announcements and strategic initiatives
7.2.4. Denel: Alliances
7.2.5. Denel: Recent contract wins
7.2.6. Ansys Limited: Overview
7.2.7. Ansys Limited: Major Products and Services
7.2.8. Ansys Limited: Alliances
7.2.9. Ansys Limited: Recent contract wins
7.2.10. Ansys Limited: Financial analysis
7.3. Key Private Sector Companies
7.3.1. Reutech: Overview
7.3.2. Reutech: Products and services
7.3.3. Reutech: Recent announcements and strategic initiatives
7.3.4. Reutech: Alliances
7.3.5. Reutech: Recent contract wins
7.3.6. Saab Grintek: Overview
7.3.7. Saab Grintek: Products and services
7.3.8. Saab Grintek: Recent announcements and strategic initiatives
7.3.9. Saab Grintek: Alliances
7.3.10. Saab Grintek: Recent contract wins
7.3.11. IVEMA: Overview
7.3.12. IVEMA: Products and services
7.3.13. IVEMA: Recent contract wins
7.3.14. Aerosud: Overview
7.3.15. Aerosud: Products and services
7.3.16. Aerosud: Recent announcements and strategic initiatives
7.3.17. Aerosud: Alliances
7.3.18. Aerosud: Recent contract wins
7.3.19. Global Armour: Overview
7.3.20. Global Armour: Products and services
7.3.21. Global Armour: Recent announcements and strategic initiatives
7.3.22. Global Armour: Alliances
7.3.23. Global Armour: Recent contract wins
7.3.24. Milkor (Pty) Ltd: overview
7.3.25. Milkor (Pty) Ltd.: products and services
7.3.26. Milkor (Pty) Ltd.: Recent announcements and strategic initiatives
7.3.27. Milkor (Pty) Ltd.: recent contract wins
7.3.28. Paramount Advanced Technologies: Overview
7.3.29. Paramount Advanced Technologies: Products and services
7.3.30. Paramount Advanced Technologies: Recent announcements and strategic initiatives
7.3.31. Paramount Advanced Technologies: Recent contract wins
7.3.32. Tellumat Defense: Overview
7.3.33. Tellumat Defense: Products and services
7.3.34. Tellumat Defense: Recent announcements and strategic initiatives
7.3.35. Tellumat Defense: Alliances
7.3.36. Tellumat Defense: Recent contract wins
8. Business Environment and Country Risk
8.1. Economic Performance
8.1.1. GDP Per Capita
8.1.2. GDP, Current Prices
8.1.3. Local Currency Unit per US$
8.1.4. Exports of Goods and Services (LCU Billion)
8.1.5. Imports of Goods and Services (LCU Billion)
8.1.6. Gross National Disposable Income (US$ Billion)
8.1.7. Goods Exports as a Percentage of GDP
8.1.8. Goods Imports as a Percentage of GDP
8.1.9. Government Cash Surplus / Deficit as a Percentage of GDP
8.1.10. Service Imports as a Percentage of GDP
8.1.11. Service Exports as a Percentage of GDP
8.1.12. Foreign Direct Investments
8.1.13. Net Foreign Direct Investments as a Percentage of GDP
8.1.14. Market Capitalization of Listed Companies (US$ Billion)
8.1.15. Market Capitalization of Listed Companies as a Percentage of GDP
8.1.16. Mining, Manufacturing, and Utilities Output
9. Appendix
9.1. About the Author
9.2. Disclaimer
List of Tables
Table 1: South Africa’s Ground Forces Strength
Table 2: South Africa’s Navy Strength
Table 3: South Africa’s Air Force Strength
Table 4: South Africa - Ongoing Development and Procurement Programs
Table 5: South Africa - Future Procurement Programs
Table 6: South Africa - Defense Procurement Programs by Value (US$ Million) 2018-2023
Table 7: South African Defense Expenditure (ZAR Billion & US$ Billion), 2014-2023
Table 8: South African GDP Growth vs. Defense Expenditure as Percentage of GDP, 2014-2023
Table 9: South African Defense Budget Split Between Capital and Revenue Expenditure (%), 2014-2023
Table 10: South African Defense Capital Expenditure (ZAR Billion & US$ Billion), 2014-2023
Table 11: South African Defense Budget Share (%) Split by Services (Army, Navy, Air Force and Other), 2014-2023
Table 12: South African Defense Budget Allocations in ZAR Billion - Breakdown by Services (Army, Air Force, Navy and Others) 2014-2023
Table 13: South African Defense Budget Allocations in US$ Billion - Breakdown by Services (Army, Air Force, Navy and Others) 2014-2023
Table 14: South African Per-Capita Defense Expenditure (US$), 2014-2023
Table 15: South African Homeland Security Expenditure (ZAR Billion & US$ Billion), 2014-2023
Table 16: Terrorism Index, 2018
Table 17: Benchmarking with Key Markets - 2014-2018 vs. 2019-2023
Table 18: South Africa - 10 Leading Defense Market Categories by Value (US$ Million), 2018-2023
Table 19: Methodology for Offset Credits
Table 20: South Africa Budget Formation Timetable
Table 21: South Africa - Top Defense Suppliers by Value (US$ Million), 2018-2023
Table 22: Competitive Landscape of the South African Defense Industry
Table 23: Denel - Product Focus
Table 24: Denel - Alliances
Table 25: Denel - Recent Contract Wins
Table 26: Ansys Limited - Product Focus
Table 27: Ansys Limited - Alliances
Table 28: Ansys Limited - Recent Contract Wins
Table 29: Reutech - Product Focus
Table 30: Reutech - Alliances
Table 31: Reutech - Recent Contract Wins
Table 32: Saab Grintek - Product Focus
Table 33: Saab Grintek - Alliances
Table 34: Saab Grintek - Recent Contract Wins
Table 35: IVEMA - Product Focus
Table 36: IVEMA - Recent Contract Wins
Table 37: Aerosud - Product Focus
Table 38: Aerosud - Alliances
Table 39: Aerosud - Recent Contract Wins
Table 40: Global Armour- Major Products & Services
Table 41: Global Armour - Alliances
Table 42: Aerosud - Recent Contract Wins
Table 43: Milkor (Pty) - Major Products & Services
Table 44: Milkor (Pty), Ltd. - recent contract wins
Table 45: Paramount Advanced Technologies - Major Products and Services
Table 46: Paramount Advanced Technologies - Recent contract wins
Table 47: Tellumat Defense - Major Products and Services
Table 48: Tellumat Defense - Alliances
Table 49: Tellumat Defense- Recent Contract Wins
List of Figures
Figure 1: South African Defense Expenditure (ZAR Billion), 2014-2023
Figure 2: South African Defense Expenditure (US$ Billion), 2014-2023
Figure 3: South African GDP Growth vs. Defense Expenditure as a Percentage of GDP, 2014-2023
Figure 4: South African Defense Budget Split Between Capital and Revenue Expenditure (%), 2014-2023
Figure 5: South African Defense Capital Expenditure (ZAR Billion),2014-2023
Figure 6: South African Defense Capital Expenditure (US$ Billion), 2014-2023
Figure 7: South Africa - Defense Expenditure Allocation (%), 2014-2023
Figure 8: South African Defense Expenditure in ZAR Billion - Breakdown by Services (Army, Air Force, Navy and Others) 2014-2023
Figure 9: South African Defense Budget in US$ Billion - Breakdown by Services (Army, Navy, Air Force and Others) 2014-2023
Figure 10: South African Per-Capita Defense Expenditure (US$), 2014-2023
Figure 11: South African Homeland Security Budget (ZAR Billion), 2014-2023
Figure 12: South African Homeland Security Budget (US$ Billion), 2014-2023
Figure 13: Terrorism Heat Map, 2018
Figure 14: Terrorism Index, 2018
Figure 15: Benchmarking with Key Markets - 2014-2018 vs. 2019-2023
Figure 16: Defense Expenditure of the World’s Largest Military Spenders (US$ Billion), 2018 and 2023
Figure 17: Defense Expenditure as Percentage of GDP of Largest Military Spenders (%), 2018
Figure 18: Infantry Fighting Vehicles: Market Size (US$ Million), 2018-2023
Figure 19: Land-based C4ISR Market Size (US$ Million), 2018-2023
Figure 20: Transport Aircraft Market Size (US$ Million), 2018-2023
Figure 21: South Africa - Defense Procurements in Terms of Supplier Relationships, 2018
Figure 22: South African Defense Imports Trend (TIV Values), 2013-2017
Figure 23: South African Defense Imports by Country (%), 2013-2017
Figure 24: South African Defense Imports by Category (%), 2013-2017
Figure 25: South Africa Defense Exports Trend (TIV Values), 2013-2017
Figure 26: South African Defense Exports by Country (%), 2013-2017
Figure 27: South African’s Defense Exports by Category (%), 2013-2017
Figure 28: Industry Dynamics - Porter’s Five Forces Analysis
Figure 29: Ansys - Revenue Trend Analysis (2014-2018)
Figure 30: Ansys - Operating Income Trend Analysis (2014-2018)
Figure 31: Ansys - Net Income Trend Analysis (2014-2018)
Figure 32: South African GDP Per Capita (US$), 2015-2025
Figure 33: South African GDP Current Prices (US$ Billion), 2015-2025
Figure 34: South African LCU per US$ 2015-2024
Figure 35: South African Exports of Goods and Services (LCU Billion), 2005-2014
Figure 36: South African Imports of Goods and Services (LCU Billion), 2005-2014
Figure 37: South African Gross National Disposable Income (US$ Billion), 2005-2014
Figure 38: South African Good Exports as (% of GDP), 2005-2014
Figure 39: South African Good Imports as (% of GDP), 2005-2014
Figure 40: South African Goods Balance (% GDP), 2005-2012
Figure 41: South African Service Imports (% GDP), 2005-2014
Figure 42: South African Service Exports (% GDP), 2005-2014
Figure 43: South African Foreign Direct Investments (BoP, Current US$ Billion), 2005-2014
Figure 44: South African Net Foreign Direct Investments (% GDP), 2005-2014
Figure 45: South African Market Capitalization of Listed Companies (US$ Billion), 2005-2012
Figure 46: South African Market Capitalization of Listed Companies (% of GDP), 2005-2012
Figure 47: South African Mining, Manufacturing, and Utilities Output (US$ Billion), 2005-2014
Samples
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Companies Mentioned (Partial List)
A selection of companies mentioned in this report includes, but is not limited to:
- Denel
- Ansys Limited
- Reutech
- Saab Grintek
- IVEMA
- Aerosud
- Global Armour
- Milkor (Pty) Ltd
- Paramount Advanced Technologies
- Tellumat Defense
Methodology
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