Future of the Afghanistan Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022

  • ID: 4311625
  • Report
  • Region: Afghanistan
  • 87 Pages
  • Strategic Defence Intelligence
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The Afghan Defense Budget is Forecast to Increase at a CAGR of 1.69% over 2018-2022 from US$1 Billion in 2017 to US$1.1 Billion in 2022

FEATURED COMPANIES

  • Lockheed Martin
  • MD Helicopters
  • MORE

Summary

Afghanistan is emerging as one of the most interesting defense markets in Central and South Asia. The US invasion of Afghanistan after the September 2001 attacks led to the formation of a democratic government which is now putting significant emphasis on the total revamp of its national infrastructure and defense industry. Its main objective is to have a strong, efficient and well-equipped armed force that can counter the Taliban insurgency and provide strong public security. These are the prime drivers of the Afghan government’s investment in the defense sector.

Afghan defense expenditure decreased at a negative CAGR of -8.82% during the historic period from US$1.4 Billion in 2013 to US$1 Billion in 2017. Around 34% of the national budget was allocated to security expenditures in 2017; however, the negative CAGR was caused by a decrease in foreign aid which previously benefitted the security sector. The Afghan defense budget is forecast to increase at a CAGR of 1.69% over 2018–2022 from US$1 Billion in 2017 to US$1.1 Billion in 2022.

Since 2002, the US government has consistently extended aid to Afghanistan to help fulfill their military requirements. The last five years showed a declining trend in aid, from US$5.3 Billion in 2013 to US$4.3 Billion in 2017. Over the forecast period, aid is projected to continue to decrease gradually, due to the withdrawal of the US armed forces from Afghanistan, and is expected to reach US$3.1 Billion in 2022.

Afghan homeland security expenditure between 2013 and 2017 cumulatively valued US$5.3 Billion. The majority was used to combat human trafficking and drug smuggling issues; a trend expected to continue over the forecast period. The country’s expenditure on homeland security is estimated to be US$4.5 Billion cumulatively during 2018-2022. Over the forecast period, the country’s budget for homeland security is expected to increase at a CAGR of 2.08% to value US$933.5 million in 2022.

Withdrawal of the International Security Assistance Force (ISAF) from Afghanistan in 2014 necessitated the need for strong and efficient Afghan National Defense Security Forces (ANDSF). As a result, the Afghan government is expected to assign an average of 5.1% of its GDP to defense purposes over 2018-2022. Afghanistan’s defense budget is projected to show marginal growth at a CAGR of 1.69% from US$1 Billion in 2017 to US$1.1 Billion in 2022.

The report “Future of the Afghanistan Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022” offers insights into market opportunities and entry strategies adopted by foreign OEMs (Original Equipment Manufacturers) to gain a market share in the Afghanistan defense industry.

In particular, it offers in-depth analysis of the following:

  • Market opportunity and attractiveness: Detailed analysis of the current industry size and growth expectations during 2018-2022, including highlights of the key growth stimulators. It also benchmarks the industry against key global markets and provides detailed understanding of emerging opportunities in specific areas.
  • Procurement Dynamics: Trend analysis of imports and exports, together with their implications and impact on the Afghanistan defense industry.
  • Industry Structure: Five forces analysis to identify various power centers in the industry and how these are expected to develop in the future.
  • Market Entry Strategy: Analysis of possible ways to enter the market, together with detailed descriptions of how existing companies have entered the market, including key contracts, alliances, and strategic initiatives.
  • Competitive landscape and strategic insights: Analysis of the competitive landscape of the defense industry in Afghanistan, providing an overview of key defense companies (both domestic and foreign), together with insights such as key alliances, strategic initiatives, and a brief financial analysis.
  • Business environment and country risk: A range of drivers at country level, assessing business environment and country risk. It covers historical and forecast values for a range of indicators, evaluating business confidence, economic performance, infrastructure quality and availability, labor force, demographics, and political and social risk.

Companies mentioned in this report: General Dynamics Corporation, Sierra Nevada Corporation (SNC), Lockheed Martin, and MD Helicopters.

Scope

  • After the NATO-led International Security Assistance Force (ISAF) left the country in 2014, Afghan security forces were made responsible for protecting the country. Afghan defense expenditure decreased at a negative CAGR of -8.82% during the historic period from US$1.4 billion in 2013 to US$1 billion in 2017. Around 34% of the national budget was allocated to security expenditures in 2017, however, the negative CAGR was caused by a decrease in foreign aid which previously benefitted the security sector.
  • expenditure allocation decreased from 21.6% in 2013 to 5.8% in 2017. Over the forecast period, the procurement of weapons, construction of infrastructure, and acquisition of assets are expected to drive capital expenditure. The average share of revenue expenditure is expected to be 93.6% over the forecast period, higher than the average share of 86.8% during 2013-2017. Increased focus on Afghan armed forces training sessions and better military personnel pay has resulted in a higher share of the defense budget being allocated to revenue expenditure, a trend expected to continue over 2018-2022.
  • The MoD is expected to invest in multi-role light atack aircraft, attack helicopters, personnel weapon systyems for infantry and artillery systems.

Reasons to Buy:

  • This report will give the user confidence to make the correct business decisions based on a detailed analysis of Afghanistan 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 during the forecast period. The description includes technical specifications, recent orders, and the expected investment pattern by the country during the forecast period
  • Detailed profiles of the top domestic and foreign defense manufacturers with information about their products, alliances, recent contract wins, and financial analysis wherever available. This will provide the user with a total competitive landscape of the sector
  • A deep qualitative analysis of Afghanistan defense industry covering sections including demand drivers, Porter’s Five Forces Analysis, Key Trends and Growth Stimulators, and latest industry contracts
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FEATURED COMPANIES

  • Lockheed Martin
  • MD Helicopters
  • MORE

1. Introduction
1.1. What is this Report About?
1.2. Definitions
1.3. Summary Methodology
1.4. About

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. Social, Political and Economic Environment and Support for Defense Projects
3.1.6. Political and Strategic Alliances
3.2. Defense Market Size Historical and Forecast
3.2.1. Afghanistan defense expenditure is expected to grow at a CAGR of 1.69% over 2018-2022
3.2.2. US aid to Afghanistan is expected to decrease over the forecast period
3.2.3. The resurgence of the Taliban, the ongoing war against terrorism and capacity building of Afghan forces to fuel defense expenditure over the forecast period
3.2.4. Afghan defense expenditure as a percentage of GDP expected to decrease considerably over the forecast period
3.3. Analysis of Defense Budget Allocation
3.3.1. Share of capital expenditure is anticipated to increase over forecast period
3.3.2. Capital expenditure expected to increase at a CAGR of 4.53% over the forecast period
3.3.3. Afghanistan to spend US$5 billion cumulatively on revenue expenditure over the forecast period
3.3.4. Per capita defense expenditure anticipated to remain steady over the forecast period
3.4. Homeland Security Market Size and Forecast
3.4.1. Afghan homeland security budget to increase at a CAGR of 2.08% over the forecast period
3.4.2. Homeland security expenditure to be triggered by the country’s efforts to counter drug trade and human trafficking
3.4.3. Afghanistan is one of the most terror prone countries in the world
3.4.4. Afghanistan falls under “worst affected” terrorism category
3.4.5. Afghanistan has a terrorism index score of “9.4”
3.5. Benchmarking against Key Global Markets
3.5.1. Afghanistan defense expenditure expected to grow significantly over forecast period
3.5.2. Afghanistan’s defense expenditure is low compared to other Asian countries
3.5.3. Afghanistan allocates a higher share of GDP for defense compared to other Asian Countries
3.6. Market Opportunities: Key Trends and Growth Stimulators
3.6.1. Aircraft
3.6.2. Attack helicopter
3.6.3. Modernization of the Afghanistan National Defense Security Force

4. Defense Procurement Market Dynamics
4.1. Import Market Dynamics
4.1.1. Afghanistan relies on defense imports from foreign countries
4.1.2. The US emerged as the largest suppliers of arms
4.1.3. Armored vehicles and aircraft dominate Afghan military imports
4.2. Export Market Dynamics
4.2.1. Afghanistan’s domestic defense manufacturing to be nil over the forecast period

5. Industry Dynamics
5.1. Five Forces Analysis
5.1.1. Bargaining power of supplier: Medium
5.1.2. Bargaining power of buyer: Medium
5.1.3. Barrier to entry: Low
5.1.4. Intensity of rivalry: Medium
5.1.5. Threat of substitution: High

6. Market Entry Strategy
6.1. Budget process
6.2. Procurement Policy and Process
6.3. Market Regulation
6.3.1. Afghanistan has not disclosed an FDI policy or investment regulations
6.3.2. Offset obligation not disclosed by the government
6.4. Market Entry Route
6.4.1. Equipment manufacturers can enter the market through government-to-government deals
6.5. Key Challenges
6.5.1. Corruption and malpractices
6.5.2. Lack of skilled labor
6.5.3. Limited defense budget

7. Competitive Landscape and Strategic Insights
7.1. Competitive Landscape Overview
7.2. Key Companies
7.2.1. General Dynamics: Overview
7.2.2. General Dynamics: Products
7.2.3. General Dynamics: Recent contract wins
7.2.4. Sierra Nevada Corporation: Overview
7.2.5. Sierra Nevada Corporation: Products
7.2.6. Sierra Nevada Corporation: Recent announcements and strategic initiatives
7.2.7. Sierra Nevada Corporation: Alliances
7.2.8. Sierra Nevada Corporation: Recent contract wins
7.2.9. Lockheed Martin Corp.: Overview
7.2.10. Lockheed Martin Corp.: Products and services
7.2.11. Lockheed Martin Corp.: Recent announcements and strategic initiatives
7.2.12. Lockheed Martin Corp.: Recent contract wins
7.2.13. MD Helicopters: Overview
7.2.14. MD Helicopters: Products and services
7.2.15. MD Helicopters: Recent announcements and strategic initiatives
7.2.16. MD Helicopters: 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 Dollar
8.1.4. Exports of Goods and Services (LCU)
8.1.5. Imports of Goods and Services (LCU)
8.1.6. Goods Exports as a percentage of GDP
8.1.7. Goods Imports as a percentage of GDP
8.1.8. Service Imports as a percentage of GDP
8.1.9. Service Exports as a percentage of GDP
8.1.10. Government Cash Surplus/Deficit as a percentage of GDP
8.1.11. Net Foreign direct investment
8.1.12. Net foreign direct investment as a percentage of GDP
8.1.13. Mining, Manufacturing, Utilities Output

9. Appendix
9.1. About
9.2. Disclaimer

List of Tables

Table 1: Afghanistan National Army (ANA) Strength
Table 2: Afghanistan Air Force (AAF) Strength
Table 3: Afghanistan Ongoing Procurement Programs
Table 4: Afghanistan Future Procurement Programs
Table 5: Afghanistan Defense Expenditure (AFN billion & US$ billion), 2013-2022
Table 6: US aid to Afghanistan (US$ Billion), 2013-2022
Table 7: Afghanistan GDP Growth vs. Defense Expenditure as a percentage of GDP, 2013-2022
Table 8: Afghanistan Defense Budget Split Between Capital and Revenue Expenditure (%), 2013-2022
Table 9: Afghanistan Defense Capital Expenditure (AFN Billion and US$ Million), 2013-2022
Table 10: Afghanistan Defense Revenue Expenditure (AFN Billion and US$ Million), 2013-2022
Table 11: Afghanistan Per-Capita Defense Expenditure (US$), 2013-2022
Table 12: Afghanistan Defense Homeland Security expenditure (AFN Billion and US$ Million), 2013-2022
Table 13: Terrorism Index, 2017
Table 14: Benchmarking against Key Markets - 2013-2017 vs. 2018-2022
Table 15: Aircraft Procurement Contracts
Table 16: Attack Helicopter Procurement Contracts
Table 17: Afghanistan Budget Preparation Process
Table 18: Competitive Landscape of the Afghan Defense Market
Table 19: General Dynamics - Product focus
Table 20: General Dynamics - Recent Contract Wins
Table 21: Sierra Nevada Corporation - Product focus
Table 22: Sierra Nevada Corporation - Alliances
Table 23: Sierra Nevada Corporation - Recent Contract Wins
Table 24: Lockheed Martin Corp. - Product focus
Table 25: Lockheed Martin Corp. - Recent Contract Wins
Table 26: MD Helicopters - Product focus
Table 27: MD Helicopters - Recent Contract Wins

List of Figures

Figure 1: Afghanistan Defense Expenditure (AFN Billion), 2013-2022
Figure 2: Afghanistan Defense Expenditure (US$ Billion), 2013-2022
Figure 3: US Aid to Afghanistan (US$ Billion), 2013-2022
Figure 4: Afghanistan GDP Growth vs. Defense Expenditure as Percentage of GDP, 2013-2022
Figure 5: Afghanistan Budget Split Between Capital and Revenue Expenditure (%), 2013-2022
Figure 6: Afghanistan Defense Capital Expenditure (AFN Billion), 2013-2022
Figure 7: Afghanistan Defense Capital Expenditure (US$ Million), 2013-2022
Figure 8: Afghanistan Defense Revenue Expenditure (AFN Billion), 2013-2022
Figure 9: Afghanistan Defense Revenue Expenditure (US$ Million), 2013-2022
Figure 10: Afghanistan Per-Capita Expenditure (US$), 2013-2022
Figure 11: Afghanistan Defense Homeland Security Expenditure (AFN Billion), 2013-2022
Figure 12: Afghanistan Defense Homeland Security Expenditure (US$ Million), 2013-2022
Figure 13: Terrorism Heat Map, 2017
Figure 14: Terrorism Index, 2017
Figure 15: Benchmarking with Key Markets - 2013-2017 vs. 2018-2022
Figure 16: Defense Expenditure of the World’s Largest Military Spenders (US$ Billion), 2017 and 2022
Figure 17: Defense Expenditure as a percentage of GDP of Largest Military Spenders (%), 2017
Figure 18: Afghanistan Defense Imports (US$ Million), 2012-2016
Figure 19: Afghanistan Defense Imports by Country (%), 2012-2016
Figure 20: Afghanistan Defense Imports by Weapon Category (%), 2012-2016
Figure 21: Industry Dynamics Porter’s Five Forces Analysis
Figure 22: Afghanistan GDP Per Capita, 2015-2025
Figure 23: Afghanistan GDP, Current Prices (In US$ Billion), 2015-2025
Figure 24: Local Currency Unit per US$ - Exchange Rate, 2015-2024
Figure 25: Afghanistan Exports of Goods and Services (In LCU Billion), 2005-2014
Figure 26: Afghanistan Imports of Goods and Services (In LCU Billion), 2005-2014
Figure 27: Afghanistan Goods Exports as a percentage of GDP, 2008-2013
Figure 28: Afghanistan Goods Imports as a percentage of GDP, 2008-2013
Figure 29: Afghanistan Service Imports as a percentage of GDP, 2008-2013
Figure 30: Afghanistan Service exports as a percentage of GDP, 2008-2013
Figure 31: Government Cash Surplus/Deficit as a percentage of GDP,2008-2012
Figure 32: Afghanistan Foreign Direct Investment, Net (current US$ Billion), 2008-2013
Figure 33: Afghanistan Net foreign direct investment as a percentage of GDP, 2008-2013
Figure 34: Afghanistan Mining, Manufacturing, Utilities Output (US$ Billion), 2005-2014

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  • General Dynamics Corporation
  • Lockheed Martin
  • MD Helicopters
  • Sierra Nevada Corporation (SNC)
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