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

  • ID: 4446844
  • Report
  • 99 pages
  • Strategic Defence Intelligence
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Egypt’s Total Defense Expenditure Is Anticipated To Post A Forecast-Period CAGR Of More Than 6.5%, To Reach Around US$5.6 Billion In 2022

Egypt’s total defense expenditure valued at about US$4 Billion in 2017 and is anticipated to post a forecast-period CAGR of more than 6.5%, to reach around US$5.6 Billion in 2022. The country has undergone a period of political turmoil since January 2011 which began with the ousting of President Hosni Mubarak following 30 years of autocratic rule and ended in the nation’s first democratic elections, which saw a new President being elected and deposed 13 months later. A cycle of violence and terror attacks have taken the country to the brink of civil war and caused the military to play a more active role in state affairs.

Egyptian defense budget represented an average of more than 16% of the allocated budget during 2013–2017, in addition to military aid of more than US$7 Billion from the US. This share is anticipated to increase to an average of just over 17% during 2018–2022.

Egypt’s domestic defense industry is completely controlled by the military through the Ministry of Military Production, and the presence of private and foreign companies is seen as a threat to the country’s national security interests. Egypt’s defense industry is also characterized by low R&D expenditure and a focus on labor-intensive manufacturing products. The military’s industrial base aims to develop the country’s defense industry by agreeing to license products and enter into technology transfer agreements with foreign companies.

Historically, US defense firms have entered the Egyptian defense industry through government-initiated foreign military financing initiatives. Egypt’s preference for the manufacture of defense systems through license agreements has resulted in a number of production activities with Chinese, German, and French companies in fields such as trainer aircraft and anti-tank missiles. The country is also involved in bilateral defense agreements with foreign governments.

The report “Future of the Egyptian Defense Industry-Market Attractiveness, Competitive Landscape and Forecasts to 2022” offers detailed analysis of the Egyptian 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 Egyptian defense industry market size and drivers: detailed analysis of the Egyptian 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 Egyptian 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 Egyptian 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: Abu Zaabal tank repair factory, Arab Organization for Industrialization-Engine Factory, Arab Organization for Industrialization-Aircraft Factory, Arab Organization for Industrialization-Sakr Factory, Arab Organization for Industrialization-Kader Factory, Arab Organization for Industrialization-Electronics Factory,Arab British Dynamics Company – Product Focus and Helwan Factory for Developed Industries– Services

Scope

  • Egypt’s total defense expenditure valued US$4.0 billion in 2017 and is anticipated to post a forecast-period CAGR of 6.58%, to reach US$5.6 billion in 2022. The country has undergone a period of political turmoil since January 2011 which began with the ousting of President Hosni Mubarak following 30 years of autocratic rule and ended in the nation’s first democratic elections which saw a new President being elected and deposed 13 months later.
  • During the historic period, Egypt allocated an average of 16.3% of its total defense budget towards capital expenditure. However, the share of capital expenditure in the overall defense budget is anticipated to increase to an average of 17.1% over the forecast period, due to the country’s procurement plans. Capital investment is anticipated to be driven by the need to replace obsolete military equipment such as multirole fighter aircraft, helicopters, air defense missile systems, naval vessels, offshore patrol vessels, surveillance systems, and light weapons and ammunition.
  • The MoD is expected to invest in Fighters & Multi-role Aircraft, transport aircraft, and Attack Helicopters.

Reasons to buy

  • This report will give the user confidence to make the correct business decisions based on a detailed analysis of the Egyptian 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 Egyptian 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
1.4. About the Publisher

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, & 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. Egyptian aggregate defense expenditure is anticipated to post a CAGR of 6.58% over the forecast period
3.2.2. Egypt defense budget (excluding US military aid) expected to cumulatively value US$18.3 billion over the forecast period
3.2.3. Perceived threats, military modernization, a strained relationship with Ethiopia, peacekeeping operations, and domestic turbulence expected to drive the country’s defense expenditure
3.2.4. Defense expenditure as a percentage of GDP is anticipated to decline during 2018-2022
3.3. Analysis of Defense Budget Allocation
3.3.1. Capital expenditure allocation is anticipated to increase over the forecast period
3.3.2. Egypt to cumulatively allocate US$3.1 billion towards defense capital expenditure (excluding US Aid) over the forecast period
3.3.3. Per capita defense expenditure to increase over the forecast period
3.3.4. Egypt considered at ‘high risk’ of terrorist attack
3.3.5. Egypt faces moderate threats from terrorist organizations
3.3.6. Egypt has a terrorism index score of 7.3
3.4. Benchmarking with key global markets
3.4.1. Egyptian defense expenditure expected to grow at a faster pace during 2018-2022
3.4.2. Egypt has a relatively small defense budget
3.4.3. Egypt allocates 1.4% of its GDP to defense
3.5. Market Opportunities: Key Trends and Growth Stimulators
3.5.1. Fighters & Multi-role Aircraft
3.5.2. Transport Aircraft
3.5.3. Attack Helicopters

4. Defense Procurement Market Dynamics
4.1. Import Market Dynamics
4.1.1. Defense imports driven by regional security dynamics
4.1.2. The US was the leading supplier of arms to Egypt during the historic period
4.1.3. Aircraft and naval vessels dominate defense imports
4.2. Export Market Dynamics
4.2.1. Defense exports from Egypt negligible during the historic period

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

6. Market Entry Strategy
6.1. Market Regulation
6.1.1. Egypt has not disclosed any offset obligation
6.1.2. Defense procurements lack legitimate procurement laws
6.2. Market Entry Route
6.2.1. Budgeting Process
6.2.2. Procurement policy and process
6.2.3. Government-to-government agreements are the preferred market entry route for foreign OEMs
6.2.4. Technology transfer and license manufacturing agreements provides an attractive market entry route
6.3. Key Challenges
6.3.1. Lack of transparency and corruption
6.3.2. Political uncertainty and internal instability discourages foreign participation
6.3.3. Stalled EU military aid may affect the defense industry

7. Competitive Landscape and Strategic Insights
7.1. Competitive Landscape Overview
7.1.1. Egyptian Defense Industry is predominantly state-run
7.2. Key Domestic Companies
7.2.1. Abu Zaabal Tank Repair Factory: overview
7.2.2. Abu Zaabal Tank Repair Factory: Products and Services
7.2.3. Abu Zaabal Tank Repair Factory: recent announcements and strategic initiatives
7.2.4. Arab Organization for Industrialization-Engine Factory: overview
7.2.5. Arab Organization for Industrialization-Engine Factory: products and services
7.2.6. Arab Organization for Industrialization-Aircraft Factory: overview
7.2.7. Arab Organization for Industrialization-Aircraft Factory: products and services
7.2.8. Arab Organization for Industrialization-Sakr Factory: overview
7.2.9. Arab Organization for Industrialization- Sakr Factory: Products
7.2.10. Arab Organization for Industrialization-Kader Factory: overview
7.2.11. Arab Organization for Industrialization-Kader Factory: Products
7.2.12. Arab Organization for Industrialization-Electronics Factory: overview
7.2.13. Arab Organization for Industrialization-Electronics Factory: Products
7.2.14. Arab British Dynamics Company: overview
7.2.15. Arab British Dynamics Company: Products
7.2.16. Helwan Factory for Developed Industries: overview
7.2.17. Helwan Factory for Developed Industries: Services

8. Business Environment and Country Risk
8.1. Economic Performance
8.1.1. Gross domestic product per capita
8.1.2. Gross domestic product (current US$ billion)
8.1.3. Exports of goods & services
8.1.4. Imports of goods & services
8.1.5. Gross national disposable income
8.1.6. LCU per USD (period average)
8.1.7. Market capitalization of listed companies (US$ Bn)
8.1.8. Market capitalization of listed companies (% of GDP)
8.1.9. Government cash surplus/deficit as % of GDP (LCU)
8.1.10. Goods Exports as a % of GDP
8.1.11. Goods Imports as a % of GDP
8.1.12. Service Imports as a % of GDP
8.1.13. Service Exports as a % of GDP
8.1.14. Foreign direct investment, Net (BoP, Current US$ Billion)
8.1.15. Foreign direct investment, as a Percentage of GDP
8.1.16. Mining, Manufacturing, Utilities Output (LCU Bn)

9. Appendix
9.1. About the Author
9.2. Disclaimer

List of Tables
Table 1: Egypt - Army Strength, 2017
Table 2: Egypt - Air Force Strength, 2017
Table 3: Egypt - Navy Strength
Table 4: Egypt - Ongoing Development and Procurement Programs, 2017
Table 5: Egypt - Future Procurement Programs, 2017
Table 6: Egypt - Defense Expenditure Including US Aid, 2013-2022
Table 7: Egypt - Defense Expenditure (EGP Billion & US$ Billion), 2013-2022
Table 8: Egypt’s GDP Growth vs. Defense Expenditure as Percentage of GDP, 2013-2022
Table 9: Egypt - Defense Budget Allocation for Capital and Revenue Expenditure (%), 2013-2022
Table 10: Egypt - Defense Capital Expenditure, Excluding US Aid (EGP Billion & US$ Billion), 2013-2022
Table 11: Egypt - Defense Expenditure as Per Capita Defense Spend (US$), 2013-2022
Table 12: Terrorism Index, 2017
Table 13: Benchmarking with Key Markets - 2013-2017 vs. 2018-2022
Table 14: Egyptian Budget Formation Timetable
Table 15: Competitive Landscape of the Egyptian Defense Industry
Table 16: Abu Zaabal Tank Repair Factory - Product Focus
Table 17: Arab Organization for Industrialization-Engine Factory - Product Focus
Table 18: Arab Organization for Industrialization-Aircraft Factory - Product Focus
Table 19: Arab Organization for Industrialization-Sakr Factory - Product Focus
Table 20: Arab Organization for Industrialization-Kader Factory - Product Focus
Table 21: Arab Organization for Industrialization-Electronics Factory - Product Focus
Table 22: Arab British Dynamics Company - Product Focus
Table 23: Helwan Factory for Developed Industries- Services

List of Figures
Figure 1: Egypt - US Military Aid (US$ Billion), 2013-2022
Figure 2: Egypt - Defense Expenditure Including US Aid (US$ Billion), 2013-2022
Figure 3: Egypt - Defense Budget Excluding US Aid (US$ Billion) Vs Egyptian Defense Expenditure Including US Aid (US$ Billion), 2013-2022
Figure 4: Egypt - Defense Budget (EGP Billion), 2013-2022
Figure 5: Egypt - Defense Budget (US$ Billion), 2013-2022
Figure 6: Egypt’s GDP Growth vs Defense Expenditure as Percentage of GDP, 2013-2022
Figure 7: Egypt - Defense Budget Allocation for Capital and Revenue Expenditure (%), 2013-2022
Figure 8: Egypt - Defense Capital Expenditure, Excluding US Aid (EGP Billion), 2013-2022
Figure 9: Egypt - Defense Capital Expenditure, Excluding US Aid (US$ Billion), 2013-2022
Figure 10: Egypt -Defense Expenditure as Per Capita Defense Spend (US$), 2013-2022
Figure 11: Terrorism Heat Map, 2017
Figure 12: Terrorism Index, 2017
Figure 13: Benchmarking with Key Markets - 2013-2017 vs. 2018-2022
Figure 14: Defense Expenditure of the World’s Largest Military Spenders (US$ Billion), 2017 and 2022
Figure 15: Countries with the Largest Defense Expenditure as a Percentage of GDP (%), 2017
Figure 16: Egypt - Fighters and Multirole Aircraft Market Size (US$ Million), 2017-2017
Figure 17: Egypt - Transport Aircraft Market Size (US$ Million), 2017-2027
Figure 18: Egypt - Attack Helicopters Market Size (US$ Million), 2017-2027
Figure 19: Egypt - Defense Imports Trend (US$ Million), 2012-2016
Figure 20: Egypt - Defense Imports by Country (%), 2012-2016
Figure 21: Egypt - Imports by Weapons Type (%), 2012-2016
Figure 22: Egypt - Defense Industry Dynamics
Figure 23: Egyptian GDP Per Capita (In US$), 2015-2025
Figure 24: Egyptian GDP, (Current Prices US$ Billions), 2015-2025
Figure 25: Egyptian Exports of Goods & Services (Current Prices, LCU Billion), 2005-2014
Figure 26: Egyptian Imports of Goods & Services (Current Prices, LCU Billion), 2004-2013
Figure 27: Egyptian Gross National Disposable Income (US$ Billion), 2007-2012
Figure 28: Egyptian LCU per USD (Period Average), 2015-2024
Figure 29: Egyptian Market Capitalization of Listed Companies (US$ Billion), 2005-2012
Figure 30: Egyptian Market Capitalization of Listed Companies (% of GDP), 2005-2012
Figure 31: Egyptian Government Cash Surplus/Deficit as % of GDP (LCU), 2005-2012
Figure 32: Egyptian Goods Exports as % of GDP, 2005-2014
Figure 33: Egyptian Goods Imports as % of GDP, 2005-2014
Figure 34: Egyptian Goods Imports as % of GDP, 2005-2014
Figure 35: Egyptian Goods Imports as % of GDP, 2005-2014
Figure 36: Egyptian Foreign Direct Investment, Net (BoP, Current US$ Billion), 2005-2014
Figure 37: Egyptian Foreign Direct Investment, as a Percentage of GDP 2005-2014
Figure 38: Egyptian Mining, Manufacturing, Utilities Output (LCU Bn), 2005-2014

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  • Abu Zaabal tank repair factory
  • Arab British Dynamics Company - Product Focus and Helwan Factory for Developed Industries - Services
  • Arab Organization for Industrialization-Aircraft Factory
  • Arab Organization for Industrialization-Electronics Factory
  • Arab Organization for Industrialization-Engine Factory
  • Arab Organization for Industrialization-Kader Factory
  • Arab Organization for Industrialization-Sakr Factory
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