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

  • ID: 4420038
  • Report
  • Region: Kenya
  • 78 pages
  • Strategic Defence Intelligence
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Kenya has consistently procured a large amount of military hardware over the last couple of years. These include small arms, armored vehicles, helicopters, rocket launchers, and aircraft, which drove defense expenditure between 2013 and 2017. The country’s defense budget increased at a CAGR of 4.01%, with an investment of US$1.1 Billion in 2013 and US$1.2 Billion in 2017. Over the forecast period, the country’s defense budget is projected to increase to US$1.5 Billion by 2022, at a CAGR of 3.70%.

Capital expenditure allocation of the Kenyan defense budget represented an average of 34.3% of the total budget during 2013–2017. This share is anticipated to decrease to an average of 34.0% during 2018–2022. On a cumulative basis, capital expenditure was US$2.0 Billion during the historic period and is anticipated to reach to US$2.3 Billion over the forecast period; as a result of the country’s plans to procure defense equipment such as CBRN detection equipment, helicopters, armored vehicles, unmanned aerial vehicles (UAVs), aircraft and surveillance equipment for monitoring.

Capital expenditure budget is projected to increase to US$504.9 million by 2022, at a CAGR of 3.36%. This is due to the government’s initiatives to acquire more weapons. The country’s budget for homeland security is anticipated to increase over the forecast period, driven by increasing threats from human trafficking, terrorism, drug, and arms smuggling.

The report “Future of the Kenya Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022” offers detailed analysis of the Kenya defense industry with market size forecasts covering the next five years. This report will also analyze factors that influence demand for the industry, key market trends, and challenges faced by industry participants.

In particular, this report provides the following:

  • The Kenya defense industry market size and drivers: Detailed analysis of the Kenya defense industry during 2018–2022, 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.
  • Porter’s Five Force analysis of the Kenya defense industry: Analysis of the market characteristics by determining the bargaining power of suppliers, bargaining power of buyers, threat of substitution, intensity of rivalry, and barriers to entry.
  • Import and Export Dynamics: Analysis of prevalent trends in the country’s imports and exports over the last five years.
  • Market opportunities: Details of the top five defense investment opportunities over the next 10 years.
  • Competitive landscape and strategic insights: Analysis of the competitive landscape of the Kenya defense industry. It provides an overview of key players, together with insights such as key alliances, strategic initiatives, and a brief financial analysis.

Companies mentioned in this report: Kenya Ordnance Factories Corporation (KOFC), JSC Rosoboronexport and Grob Aircraft

Scope

The Kenya government has been steadily increasing its defense budget 2015 - 2017. Defense expenditure registered a CAGR of 4.01% over 2013-2017. The country allocated US$1.1 billion to its defense sector in 2013, which increased to US$1.2 billion in 2017. This trend is expected to continue during the forecast period, owing to the government’s well-defined military modernization plans to better equip its armed forces.
Revenue expenditure allocation decreased from 65.6% in 2013 to 64.2% in 2017. Conversely, the country’s capital expenditure increase from 34.4% to 35.8% during the historic period. Over the forecast period, Kenya is expected to allocate an average of 34.0% of its defense budget to capital expenditure, while the remainder will be assigned to revenue expenditure.
The MoD is expected to invest in acquisition of CBRN Detection Equipment and Armored Vehicles.

Reasons to buy

  • This report will give the user confidence to make the correct business decisions based on a detailed analysis of the Kenya 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 the Kenya 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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1. Introduction
1.1. What is this Report About?
1.2. Definitions
1.3. Summary Methodology

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 & Strategy
3.1.3. Military Fleet Size
3.1.4. Procurement Programs
3.1.5. Social, Political and Economic Environment & Support for Defense Projects
3.1.6. Political and Strategic Alliances
3.2. Defense Market Size Historical and Forecast
3.2.1. Kenyan defense budget to grow at an estimated CAGR of 3.70% during 2018-2022
3.2.2. Border security, terrorist group threats, peacekeeping missions, and the need to modernize outdated defense equipment to drive Kenya’s defense expenditure
3.2.3. Defense budget as a percentage of GDP will remain at an average of 1.4% over the forecast period
3.3. Analysis of Defense Budget Allocation
3.3.1. Share of capital expenditure is expected to increase during the forecast period
3.3.2. Capital expenditure is anticipated to record a CAGR of 3.36% during the forecast period
3.3.3. Kenya’s per capita defense expenditure is expected to increase during the forecast period
3.4. Homeland Security Market Size and Forecast
3.4.1. The homeland security market in Kenya is expected to grow at a CAGR of 4.60% during the forecast period
3.4.2. Human trafficking and illicit drugs trade to drive homeland security expenditure
3.4.3. Kenya falls under “highly affected” category in the terrorism index
3.4.4. Kenya faces high level of threat from terrorist organizations
3.4.5. Kenya has a terrorism index score of 6.6
3.5. Benchmarking with Key Global Markets
3.5.1. Kenyan defense expenditure expected to remain low compared to leading spenders
3.5.2. Kenya will continue to remain as a small contributor in the global arms market
3.5.3. Defense budget as a percentage of GDP is expected to increase over the forecast period
3.6. Market Opportunities: Key Trends and Growth Stimulators
3.6.1. CBRN Detection Equipment
3.6.2. Armored Vehicles

4. Defense Procurement Market Dynamics
4.1. Import Market Dynamics
4.1.1. Defense imports increased during the period 2011-2015
4.1.2. Weapons manufactured in Spain comprised the majority of imports to Kenya
4.1.3. Aircraft, Missiles, and Air defense systems accounted for a total share 88.8% in Kenyan defense imports
4.2. Export Market Dynamics
4.2.1. Kenya defense exports were negligible during 2013-2016

5. Industry Dynamics
5.1. Five Forces Analysis
5.1.1. Bargaining power of the supplier: high
5.1.2. Bargaining power of the buyer: low
5.1.3. Barrier to entry: medium to high
5.1.4. Intensity of rivalry: high
5.1.5. Threat of substitution: medium to high
5.2. Market Regulation
5.2.1. Kenya does not disclose any offset obligations imposed by the country
5.2.2. Foreign direct investment (FDI) is determined on a case to case basis
5.3. Market Entry Route
5.3.1. Budgeting Process
5.3.2. Defense procurement process
5.3.3. Equipment manufacturers enter the market through government-to-government deals
5.4. Key Challenges
5.4.1. Corruption and lack of transparency are the factors which hinder the growth of the Kenyan defense industry
5.4.2. Low defense budget to act as obstacle for foreign investors

6. Competitive Landscape and Strategic Insights
6.1. Competitive Landscape Overview
6.1.1. Foreign suppliers manufacture defense systems overseas and deliver to Kenya
6.2. Key Domestic Companies
6.2.1. Kenya Ordnance Factories Corporation: overview
6.2.2. Kenya Ordnance Factories Corporation: products and services
6.2.3. Rosoboronexport: overview
6.2.4. Rosoboronexport: products
6.2.5. Rosoboronexport: recent contract wins
6.2.6. Grob Aircraft: overview
6.2.7. Grob Aircraft: products
6.2.8. Grob Aircraft: recent contract wins

7. Business Environment and Country Risk
7.1. Economic Performance
7.1.1. GDP per capita at constant prices (US$)
7.1.2. GDP at current prices (US$)
7.1.3. Exports of goods and services
7.1.4. Imports of goods and services
7.1.5. Gross National disposable income (US$ Bn)
7.1.6. LCU per US$ (period average)
7.1.7. Market capitalization of listed companies (US$ billion)
7.1.8. Market capitalization of listed companies (% GDP)
7.1.9. Government cash surplus/deficit as a percentage of GDP (LCU)
7.1.10. Goods exports as a percentage of GDP
7.1.11. Goods Imports as a percentage of GDP
7.1.12. Services imports as a percentage of GDP
7.1.13. Services Exports as a percentage of GDP
7.1.14. Foreign direct investment, net (BoP, current US$ billions)
7.1.15. Net foreign direct investment as a percentage of GDP
7.1.16. Mining, Manufacturing, Utilities Output (LCU Bn)

8. Appendix
8.1. About the Author
8.2. Disclaimer

List of Tables
Table 1: Kenya Ground Forces Strength
Table 2: Kenya Air Force Strength
Table 3: Kenya Navy Strength
Table 4: Kenya - Ongoing Development and Procurement Programs
Table 5: Kenya - Future Procurement Programs
Table 6: Kenyan Defense Expenditure (KES billion& US$ billion), 2013-2022
Table 7: Kenyan GDP Growth and Defense Expenditure as Percentage of GDP Growth, 2013-2022
Table 8: Kenyan Defense Budget Split Between Capital and Revenue Expenditure (%), 2013-2022
Table 9: Kenyan Defense Capital Expenditure (KES Billion &US$ Billion), 2013-2022
Table 10: Kenyan Per Capita Defense Expenditure (US$), 2013-2022
Table 11: Kenyan Homeland Security Expenditure (KES billion& US$ billion), 2013-2022
Table 12: Terrorism Index, 2017
Table 13:Benchmarking with Key Markets - 2013-2017 vs. 2018-2022
Table 14: Bangladeshi Budget Formation Timetable
Table 15: Competitive Landscape of the Kenya Defense Industry
Table 16: Kenya Ordnance Factories Corporation- Product Focus
Table 17:Rosoboronexport- Recent Contract Wins
Table 18:Grob Aircraft- Recent Contract Wins

List of Figures
Figure 1: Kenyan Defense Expenditure (KES Billion), 2013-2022
Figure 2: Kenyan Defense Expenditure (US$ Billion), 2013-2022
Figure 3: Kenya GDP Growth and Defense Expenditure as Percentage of GDP Growth,2013-2022
Figure 4: Kenyan Defense Budget Split Between Capital and Revenue Expenditure (%),2013-2022
Figure 5: Kenyan Defense Capital Expenditure (KES Billion), 2013-2022
Figure 6: Kenyan Defense Capital Expenditure (US$ Million), 2013-2022
Figure 7: Kenyan Per Capita Defense Expenditure (US$), 2013-2022
Figure 8: Kenyan Homeland Security Expenditure (KES Billion), 2013-2022
Figure 9: Kenyan Homeland Security Expenditure (US$ billion), 2013-2022
Figure 10: Terrorism Heat Map, 2017
Figure 11: Terrorism Index, 2017
Figure 12: Benchmarking with Key Markets, 2013-2017 vs. 2018-2022
Figure 13: Defense Expenditure of the World’s Largest Military Spenders (US$ Billion), 2017 and 2022
Figure 14: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2017
Figure 15: Kenya CBRN Detection Equipment (US$ Million), 2017-2025
Figure 16: Kenya Armored Vehicles (US$ Million), 2017-2020
Figure 17: Kenya Defense Import Trend, 2012-2016 (TIV values)
Figure 18: Kenya Defense Import by Country, 2012-2016 (TIV values)
Figure 19: Kenyan Defense Imports by Category (%),2012-2016
Figure 20: Industry Dynamics Porter’s Five Forces Analysis
Figure 21: Kenya’s GDP Per Capita at Constant Prices (US$), 2015-2025
Figure 22: Kenya’s GDP at Current Prices (US$ Billion), 2015-2024
Figure 23: Kenya’s exports of goods and services (LCU Billion), 2005-2014
Figure 24: Kenyan Imports of goods and services (LCU Billion), 2005-2014
Figure 25: Kenya’s Gross National Disposable Income (US$ Billion), 2005-2013
Figure 26: Kenya’s KES per US$, 2015-2024
Figure 27: Kenya’s market capitalization of listed companies (US$ Billion), 2005-2012
Figure 28: Kenya’s market capitalization of listed companies (%GDP), 2005-2012
Figure 29: Kenya-Government cash surplus/deficit as % of GDP (KES), 2005-2012
Figure 30: Kenya- Goods exports as a % of GDP (%), 2005-2014
Figure 31: Kenya- Goods imports as a % of GDP (%), 2005-2014
Figure 32: Kenya- Services imports as a % of GDP (%), 2005-2014
Figure 33: Kenya- Services exports as a % of GDP (%), 2005-2014
Figure 34: Kenya- Foreign direct investment, net (BoP, current US$ billion), 2005-2014
Figure 35: Kenya’s Net foreign direct investment as % of GDP, 2005-2014
Figure 36: Kenya’s Mining, Manufacturing, Utilities Output (LCU Bn), 2005-2014

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  • JSC Rosoboronexport and Grob Aircraft
  • Kenya Ordnance Factories Corporation (KOFC)
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