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Middle-East and Africa Defense Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

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  • 90 Pages
  • January 2022
  • Region: Africa
  • Mordor Intelligence
  • ID: 4997436

The Middle-East and African defense market is anticipated to register a CAGR of above 1% during the forecast period.

Key Highlights

  • The decline in revenues of the governments, due to decreasing oil prices, caused a budget deficit, which impacted the defense spending of the countries in the Middle-East. However, countries, like the United Arab Emirates, Qatar, and Morocco, among others, are investing in the modernization of their military capabilities.
  • The procurement plans of countries to purchase vehicles, weapons, and related armaments to modernize their aging equipment in the region are expected to act as major drivers for the market during the forecast period. These procurements are fueled by the geopolitical and military conflicts in the region.
  • The decrease of military spending for four consecutive years with a combination of economic crisis and continued violent conflicts in the countries of the African region are hampering the growth of the defense market.
  • Owing to the economic crisis and low budgets of governments in the Middle-East and Africa regions, countries, like Saudi Arabia, the United Arab Emirates, South Africa, and Morocco, among others, are taking initiatives to support the local manufactures. Companies, like Saudi Arabian Military Industries (SAMI) and Denel SOC, are working in collaboration with international military OEMs to enhance their technology and manufacturing capabilities to further expand their presence in the domestic and international markets.

Key Market Trends

The Vehicles Segment to Experience the Highest Growth During the Forecast Period

The vehicles segment of the market is expected to register the highest CAGR during the forecast period. This growth is mainly expected to be due to the current plans of the countries in Middle-East and Africa to modernize their armed forces and upgrade their air, land, and sea capabilities. For instance, in June 2018, Bahrain signed a USD 1.12 billion fixed-price incentive firm contract for 16 F-16V aircraft with Lockheed Martin Corporation and became the launch customer for the aircraft. The Royal Bahraini Air Force (RBAF) also plans to upgrade its 20 Block 40 F-16C/D aircraft to the latest standard to make a total fleet of 36 F-16V aircraft. The contract is scheduled to come to end by the end of September 2023. Countries, like the United Arab Emirates, Qatar, Turkey, and Saudi Arabia, are currently majorly focusing on developing their naval capabilities. Egypt is emerging as the naval superpower in Middle-East and Africa after the rapid modernization of its equipment and naval vessels. For instance, in April 2019, the government of Germany approved a deal of USD 2.58 billion deal for the delivery of six frigates to the Egyptian navy. Such procurements by the armed forces of the countries in the region are anticipated to drive the growth of the segment during the forecast period.

Saudi Arabia Currently Holds the Highest Market Share

Saudi Arabia is the third-largest military spender and the largest spender in terms of percentage of GDP in the world, with USD 67.6 billion spending in 2018. The country decreased its spending by approximately 18.34% (cumulative) during the past five years, and military spending increased by 11% in 2017 but decreased by 6.5% in 2018. With the largest military budget, the country emerged as the largest importer of arms majorly from the United States, followed by the United Kingdom and France. Its arms exports increased by 192% during 2009-2013 and 2014-2018. 83 tanks, 98 combat aircraft, and 7 missile defense systems from the United States, 5 frigates from Spain, 737 armored vehicles from Canada, and short-range ballistic missiles from Ukraine are some of the scheduled military vehicle deliveries during the 2019-2023 period. Saudi Arabia’s war at Yemen and competition for regional influence with Iran are some of the factors driving the military procurements of the country, along with its Vision 2030 plans to strengthen its aerospace and defense manufacturing sector. Under this initiative, the local companies partnered with various international players to improve their manufacturing and technological capabilities. For instance, in June 2019, Saudi Arabian Military Industries (SAMI) signed a Memorandum of Understanding (MoU) with Korean conglomerate Hanwha Group to form a joint-venture company, SAMI-Hanwha Munitions Systems LLC, which is focused on the manufacturing and sale of munitions in Saudi Arabia. Later, the JV will evaluate the expansion of its product portfolio to ammunition and weapons, artillery systems, rockets, ISR systems, combat vehicles, etc. Such factors are expected to drive the growth of the defense market in Saudi Arabia during the forecast period.

Competitive Landscape

The prominent players in the Middle-East and African defense market are The Boeing Company, Lockheed Martin Corporation, Saudi Arabian Military Industries, Israel Aerospace Industries, and BAE Systems PLC. There are many local players in the market and most of these state companies in the region provide their products and solutions to their respective domestic armed and security forces. Elbit Systems Ltd, Aselsan AS, Israel Aerospace Industries, and Denel SOC are some of the domestic players that have an international presence for providing a wide range of military products, from portable military equipment for land forces to radars and other equipment onboard aircraft. With innovation and expansion as major strategies, the companies are currently concentrating on product innovation to capture the market presence in emerging countries. Also, countries are concentrating on developing their local manufacturing facilities. For instance, currently, only 2% of total Saudi Arabia’s military spending is provided to local defense companies. To strengthen its local manufacturing, under Vision 2030, the government plans to increase the local military equipment spending to 50% by 2030. With such initiatives, the governments are making significant investments in manufacturers, and the local manufacturers are also collaborating with foreign players for technology exchange and integration of advanced manufacturing technologies. For example, CNO Tech, a South Korean ammunition manufacturer, signed a technology transfer agreement with the Public Authority for Privatisation and Partnership (PAPP) to transfer production-line technologies to the Oman Munition Production Company (OMPC), in November 2019. With the growth of collaborations and in-house capabilities of the local companies, domestic manufacturers are anticipated to increase their domination over international players during the forecast period.

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Table of Contents

1.1 Study Assumptions
1.2 Scope of the Study
4.1 Market Overview
4.2 Market Drivers
4.3 Market Restraints
4.4 PESTLE Analysis
6.1 Procurement
6.1.1 Personnel Training and Protection
6.1.2 Communication Systems
6.1.3 Weapons and Ammunition
6.1.4 Vehicles Land-based Vehicles Sea-based Vehicles Air-based Vehicles
6.2 MRO
6.2.1 Communication Systems
6.2.2 Weapons and Ammunition
6.2.3 Vehicles
6.3 Country
6.3.1 Saudi Arabia
6.3.2 Turkey
6.3.3 Israel
6.3.4 Egypt
6.3.5 Algeria
6.3.6 South Africa
6.3.7 Morocco
6.3.8 Rest of Middle-East and Africa
7.1 Vendor Market Share
7.2 Company Profiles
7.2.1 SAMI
7.2.2 Emirates Defence Industries Company
7.2.3 Advanced Electronics Company
7.2.4 Military Industries Corporation
7.2.5 Dahra Engineering & Security Services LLC
7.2.6 Lockheed Martin Corporation
7.2.7 The Boeing Company
7.2.8 Elbit Systems Ltd
7.2.9 Israel Aerospace Industries
7.2.10 Raytheon Company
7.2.11 Rheinmetall AG
7.2.12 Aselsan AS
7.2.13 Denel SOC
7.2.14 Northrop Grumman Corporation
7.2.15 BAE Systems PLC

Companies Mentioned (Partial List)

A selection of companies mentioned in this report includes, but is not limited to:

  • SAMI
  • Emirates Defence Industries Company
  • Advanced Electronics Company
  • Military Industries Corporation
  • Dahra Engineering & Security Services LLC
  • Lockheed Martin Corporation
  • The Boeing Company
  • Elbit Systems Ltd
  • Israel Aerospace Industries
  • Raytheon Company
  • Rheinmetall AG
  • Aselsan AS
  • Denel SOC
  • Northrop Grumman Corporation
  • BAE Systems plc