Future of the Algerian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2023

  • ID: 4583735
  • Report
  • Region: Algeria
  • 97 Pages
  • Strategic Defence Intelligence
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Algeria’s sudden rise as a major military force in Africa can be attributed to its burgeoning economy and a desire to establish its military superiority in the region. With a defense budget of US$9.8 billion in 2018, Algeria is currently the largest military spender in the African region. Military expenditure is strongly supported by the presence of the oil and natural gas industry, where revenues are directed towards strengthening defense and security.

The country’s capital expenditure is expected to increase from US$1.9 billion in 2019 to US$2.3 billion in 2023, growing at a robust CAGR of 4.56% over the forecast period. The increased threat of terrorism from the Islamic group Al-Qaeda in the Islamic Maghreb (AQIM) operating in North Africa, an arms race with neighboring countries such as Morocco and Tunisia, and the ongoing modernization of its armed forces are key factors expected to drive military expenditure. Furthermore, the instability in neighboring Libya, coupled with the rapid spread of Islamic State (IS) in the country, has compelled Algeria to bolster its defenses and develop a robust defense posture. The Algerian defense industry is expected to grow to US$11.9 billion by 2023 at a CAGR of 4.31%.

Algeria has observed a marked decline in instances of violent attacks perpetuated by armed insurgent groups. The country’s political and economic measures to de-radicalize its population have succeeded to a great extent, and the country has managed to significantly limit the influence of foreign terrorist organizations such as Al-Qaeda in the Islamic Maghreb (AQIM). As such, Algeria does not face any urgent internal threats to justify expansive spending on the homeland security sector. As its homeland security (HLS) expenditure stands at US$3.7 billion in 2019 and is expected to increase at a minimal CAGR of 1.64% over the forecast period to reach US$4.0 billion in 2023.

Historically, Russian defense firms have entered the Algerian defense industry through government initiated foreign military sales. The country is increasing its efforts to reduce its military dependency on foreign suppliers and, therefore, is largely concentrating on the joint development of defense systems to strengthen its domestic defense manufacturing capabilities. Furthermore, Algeria has witnessed a number of JVs with Algerian, Russian, French, and Serbian companies in areas such as armored vehicles, unmanned aircraft, military healthcare, and counter-terrorism equipment

This report offers detailed analysis of the Algerian 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.

Scope

In particular, it provides an in-depth analysis of the following -

  • The Algerian defense industry market size and drivers: detailed analysis of the Algerian 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 Algerian defense industry.

Reasons to buy

  • This report will give the user confidence to make the correct business decisions based on a detailed analysis of the Algerian 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
  • 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 Algerian defense industry covering sections including demand drivers, Key Trends , 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 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. Algeria’s defense budget to grow at a CAGR of 4.31% over the forecast period
3.2.2. Rising threat of terrorism and an arms race in the region to drive Algeria’s defense expenditure
3.2.3. The defense budget as a percentage of GDP will remain at an average of 4.8% over the forecast period
3.3. Analysis of Defense Budget Allocation
3.3.1. Share of capital expenditure is expected to increase over the forecast period
3.3.2. Capital expenditure is expected to record a CAGR of 4.56% over the forecast period
3.3.3. Algeria’s per-capita defense expenditure is expected to increase over the forecast period
3.4. Homeland Security Market Size and Forecast
3.4.1. The homeland security market in Algeria is expected to grow at a CAGR of 1.64% over the forecast period
3.4.2. Human trafficking and drug trafficking form the main components of homeland security expenditure
3.4.3. Algeria faces “moderate risk” of terrorism
3.4.4. Algeria faces a moderate level of threat from foreign terrorist organizations
3.4.5. Algeria has a terrorism index score of 4.0
3.5. Benchmarking with Key Global Markets
3.5.1. Algerian defense expenditure is expected to remain low compared to leading spenders
3.5.2. Algeria will continue to dominate the arms market in the Africa region
3.5.3. Defense budget as a percentage of GDP is expected to remain low over the forecast period
3.6. Market Opportunities: Key Trends and Drivers
3.6.1. Top 10 Defense Market Categories by Value (US$ million) - Forecast-Period Projections
3.6.2. Land-based C4ISR
3.6.3. Transport Aircraft
3.6.4. Networking

4. Defense Procurement Market Dynamics
4.1. Import Market Dynamics
4.1.1. Defense imports increased during 2013-2017
4.1.2. Russia, China, Germany and Italy are the major defense equipment suppliers for Algeria
4.1.3. Aircraft, armored vehicles, and naval vessels accounted for a total share of 74% in Algerian defense imports
4.2. Export Market Dynamics
4.2.1. Algeria does not export arms due to an undeveloped domestic arms industry

5. Industry Dynamics
5.1. Five Forces Analysis
5.1.1. Bargaining Power of the Supplier: Low to Medium
5.1.2. Bargaining Power of the Buyer: Medium
5.1.3. Barriers to Entry: High
5.1.4. Intensity of Rivalry: Low to Medium
5.1.5. Threat of Substitution: High

6. Market Entry Strategy
6.1. Market Regulation
6.1.1. Formal offset policy to be drafted to ensure growth of the country’s domestic defense manufacturing industry
6.1.2. Foreign direct investment in defense
6.2. Market Entry Route
6.2.1. Budget Process
6.2.2. Defense procurement process
6.2.3. Collaborations provide market entry opportunities
6.2.4. Government-to-government agreements are the preferred market entry route for foreign OEMs
6.3. Key Challenges
6.3.1. Corruption and lack of transparency pose an obstacle for market entry
6.3.2. Lack of relevant defense procurement policy

7. Competitive Landscape and Strategic Insights
7.1. Competitive Landscape Overview
7.1.1. Foreign suppliers manufacture defense systems overseas and deliver to Algeria
7.1.2. Rosoboronexport: Overview
7.1.3. Rosoboronexport: Products
7.1.4. Rosoboronexport: Recent Announcements and Strategic Initiatives
7.1.5. Rosoboronexport: Alliances
7.1.6. Rosoboronexport: Recent Contract Wins
7.2. Key Domestic Companies
7.2.1. Entreprise Nationale des Véhicules Industriels: Overview
7.2.2. Entreprise Nationale des Véhicules Industriels Vehicles: Products and Services
7.2.3. Entreprise Nationale des Véhicules Industriels: Recent Announcements and Strategic Initiatives
7.2.4. Entreprise Nationale des Véhicules Industriels: Alliances
7.2.5. NIMR-Algerie Joint Stock Company: Overview
7.2.6. NIMR-Algerie Joint Stock Company: Products
7.2.7. Khenchela Mechanical Constructions Establishment (ECMK): Overview
7.2.8. Khenchela Mechanical Constructions Establishment: Products
7.2.9. Khenchela Mechanical Constructions Establishment: Recent Announcements and Strategic Initiatives
7.2.10. Khenchela Mechanical Constructions Establishment: Alliances
7.2.11. Seriana Company of Industrial Achievements (ERIS): Overview
7.2.12. Seriana Company of Industrial Achievements: Products
7.2.13. National Office of Explosive Substances, EPE (ONEX): Overview
7.2.14. National Office of Explosive Substances: Products

8. Business Environment and Country Risk
8.1. Economic Performance
8.1.1. GDP Per-Capita at Constant Prices (US$)
8.1.2. GDP at Current Prices (US$ Billions)
8.1.3. Exports of Goods and Services, Local Currency Unit (LCU Billions)
8.1.4. Imports of Goods and Services, Local Currency Unit (LCU Billions)
8.1.5. Gross National Disposable Income (US$ Billions)
8.1.6. Local Currency Unit (LCU) per US$ (Period Average)
8.1.7. Government Cash Surplus/Deficit as a Percentage of GDP, Local Currency Unit (LCU)
8.1.8. Goods Exports as a Percentage of GDP
8.1.9. Goods Imports as a Percentage of GDP
8.1.10. Services Imports as a Percentage of GDP
8.1.11. Services Exports as a Percentage of GDP
8.1.12. Foreign Direct Investment, Net (Balance of Payments or BoP, Current US$ Billions)
8.1.13. Net Foreign Direct Investment as a Percentage of GDP
8.1.14. Mining, Manufacturing, Utilities Output (Local Currency Units or LCU, Billions)

9. Appendix

List of Tables
Table 1: Algerian Army Strength
Table 2: Algerian Navy Strength
Table 3: Algerian Air Force Strength
Table 4: Algeria - Ongoing Development and Procurement Programs
Table 5: Algerian - Future Procurement Programs
Table 6: Algerian - Defense Procurement Programs by Value (US$ Million) 2018-2023
Table 7: Algerian Defense Expenditure (DZD Billion & US$ Billion), 2014-2023
Table 8: Algerian GDP Growth and Defense Expenditure as Percentage of GDP Growth, 2014-2023
Table 9: Algerian Defense Budget Split Between Capital and Revenue Expenditure (%), 2014-2023
Table 10: Algerian Defense Capital Expenditure (DZD Billion and US$ Billion), 2014-2023
Table 11: Algerian Per Capita Defense Expenditure (US$), 2014-2023
Table 12: Algerian Homeland Security Expenditure (DZD Billion & US$ Billion), 2014-2023
Table 13: Terrorism Index, 2018
Table 14: Benchmarking with Key Markets - 2014-2018 vs. 2019-2023
Table 15: Algeria - 10 Leading Defense Market Categories by Value (US$ Million) - 2018-2023
Table 16: Algerian Budget Planning Process
Table 17: Algeria - Top 10 Defense Suppliers by Value (US$ Million), 2018-2023
Table 18: Competitive Landscape of the Algerian Defense Industry
Table 19: Rosoboronexport - Key Products
Table 20: Rosoboronexport - Alliances
Table 21: Rosoboronexport - Recent Contract Wins
Table 22: Entreprise Nationale des Véhicules Industriels - Key Products and Services
Table 23: Entreprise Nationale des Véhicules Industriels - Alliances
Table 24: NIMR-Algerie - Key Products
Table 25: Khenchela Mechanical Constructions Establishment - Key Products
Table 26: Khenchela Mechanical Constructions Establishment (ECMK) - Alliances
Table 27: Seriana Company of Industrial Achievements - Key Products
Table 28: National Office of Explosive Substances - Key Products

List of Figures
Figure 1: Algerian Defense Expenditure (DZD Billion), 2014-2023
Figure 2: Algerian Defense Expenditure (US$ Billion), 2014-2023
Figure 3: Algeria’s GDP Growth and Defense Expenditure as a % of GDP Growth, 2014-2023
Figure 4: Algerian Defense Budget Split Between Capital and Revenue Expenditure (%), 2014-2023
Figure 5: Algerian Defense Capital Expenditure (DZD Billion), 2014-2023
Figure 6: Algerian Defense Capital Expenditure (US$ Billion), 2014-2023
Figure 7: Algerian Per Capita Defense Expenditure (US$), 2014-2023
Figure 8: Algerian Homeland Security Expenditure (DZD Billion), 2014-2023
Figure 9: Algerian Homeland Security Expenditure (US$ Billion), 2014-2023
Figure 10: Terrorism Heat Map, 2018
Figure 11: Terrorism Index, 2018
Figure 12: Benchmarking with Key Markets, 2014-2018 vs. 2019-2023
Figure 13: Defense Expenditure of the World’s Largest Military Spenders (US$ Billion), 2018 and 2023
Figure 14: Defense Expenditure as a Percentage of GDP of the Largest Military Spenders (%), 2018
Figure 15: Land-based C4ISR Market Size (US$ Million), 2018-2023
Figure 16: Transport Aircraft Market Size (US$ Million), 2018-2023
Figure 17: Networking Market Size (US$ Million), 2018-2023
Figure 18: Algeria - Defense Procurements in Terms of Supplier Relationships, 2018
Figure 19: Algeria Defense Import Trend (US$ Million), 2013-2017 (TIV Values*)
Figure 20: Algerian Defense Import by Country (%), 2013-2017
Figure 21: Algerian Defense Imports by Category (%), 2013-2017
Figure 22: Industry Dynamics - Porter’s Five Forces Analysis
Figure 23: Algeria’s GDP Per Capita at Constant Prices (US$), 2015-2025
Figure 24: Algeria’s GDP at Current Prices (US$ Billions), 2015-2025
Figure 25: Algeria’s Exports of Goods and Services (LCU Billions), 2005-2014
Figure 26: Algerian Imports of Goods and Services (LCU Billions), 2005-2014
Figure 27: Algeria’s Gross National Disposable Income (US$ Billions), 2005-2014
Figure 28: Algeria’s LCU per US$, 2015-2024
Figure 29: Algeria - Government Cash Surplus/Deficit as a % of GDP (LCU), 2005-2011
Figure 30: Algeria - Goods Exports as a Percentage of GDP (%), 2005-2014
Figure 31: Algeria - Goods Exports as a Percentage of GDP (%), 2005-2014
Figure 32: Algeria - Services Imports as a Percentage of GDP (%), 2005-2013
Figure 33: Algeria - Services Exports as a Percentage of GDP (%), 2005-2013
Figure 34: Algeria - Foreign Direct Investment, net (BoP, Current US$ Billions), 2005-2013
Figure 35: Algeria’s Net Foreign Direct Investment as a % of GDP, 2005-2013
Figure 36: Algeria’s Mining, Manufacturing, Utilities Output LCU Billions, 2005-2014

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  • Rosoboronexport
  • Entreprise Nationale des Véhicules Industriels Vehicles
  • NIMR-Algerie Joint Stock Company
  • Khenchela Mechanical Constructions Establishment
  • Seriana Company of Industrial Achievements
  • National Office of Explosive Substances
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