Market Research Report
The Egyptian Defense Industry - Market Opportunities and Entry Strategies, Analyses and Forecasts to 2017
|Published by||Strategic Defence Intelligence||Product code||255129|
|Published||Content info||99 Pages
|The Egyptian Defense Industry - Market Opportunities and Entry Strategies, Analyses and Forecasts to 2017|
|Published: November 26, 2012||Content info: 99 Pages||
This report is the result of SDI's extensive market and company research covering the Egyptian defense industry, and provides detailed analysis of both historic and forecast defense industry values including key growth stimulators, analysis of the leading companies in the industry, and key news.
The Egyptian defense Industry Market Opportunities and Entry Strategies, Analyses and Forecasts to 2017 offers the reader aninsight into the market opportunities and entry strategies adopted by foreign original equipment manufacturers (OEMs) to gain market share in the Egyptian defense industry.
Egypt is a major non-NATO ally of the US and, for the past three decades, has been receiving Foreign Military Financing from the US amounting to US$1.3 billion per year. This FMF makes up 80 percent of the country's defense capital expenditure and comes with a clause which requires the country to spend the entire amount on purchasing military equipment from American contractors. Egypt has used this financing to replace the majority of its aging Soviet and Chinese equipment with American military hardware and, as a result, the vast majority of the Egyptian arsenal is produced by US contractors and Egypt is highly dependent on American financing and support. The preponderance of American military hardware also means that Egypt is reliant on contracts with US companies for the maintenance of its armed forces equipment.
Although Egypt is not under any real threat of aggression from its neighbors, the perceived threat from Israel and the increasing political instability in the country are a cause of concern for the military and these factors are expected to drive and determine the country's defense expenditure in the forecast period. In 1979, the US brokered a peace treaty between Israel and Egypt. Under the terms of the agreement the US provides FMF to both countries, with US$3 billion per year to Israel and US$1.3 billion per year to Egypt, and this is one of the main influences on the Egyptian defense budget.
The Egyptian defense Industry Market Opportunities and Entry Strategies, Analyses and Forecasts to 2017 provides detailed analysis of the current industry size and growth expectations from 2013 to 2017, including highlights of key growth stimulators. It also benchmarks the industry against key global markets and provides a detailed understanding of emerging opportunities in specific areas.
The report provides detailed analysis of the current industry size and growth expectations from 2013to 2017, including highlights of key growth stimulators, and also benchmarks the industry against key global markets and provides a detailed understanding of emerging opportunities in specific areas.
The report includes trend analysis of imports and exports, together with their implications and impact on the Egyptian defense industry.
The report covers five forces analysis to identify various power centers in the industry and how these are expected to develop in the future.
The report allows readers to identify 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.
The report helps the reader to understand the competitive landscape of the defense industry inEgypt. It provides an overview of key defense companies, both domestic and foreign, together with insights such as key alliances, strategic initiatives, and a brief financial analysis.
Egypt does not follow open market and fair competition principles regarding defense deals; instead preferring to conduct private government to government or military to military talks regarding defense procurements and making it difficult for foreign firms to compete. Additionally, the country does not follow a structured defense budgeting mechanism, which often results in improper budget allocations and a high level of corruption in the armed forces. A number of foreign OEMs find the lack of transparency in Egypt's defense deals, and delays in finalization, key challenges to the successful execution of defense deals in the country.
Egypt is currently undergoing its greatest political change in half a century; and the mass civil protest that started in January 2011, has led to the fall of the country's authoritarian regime and the promise of democratic presidential elections in November 2011. As a result of this period of dramatic change, the country is currently characterized by political instability. This uncertainty has discouraged foreign defense companies from continuing to participate in Egypt's defense sector and deterred new participants from establishing operations in the country.
US FMF accounts for almost 80% of the country's defense capital expenditure, and according to the contract, the whole amount is spent on military procurement from the US contractors, resulting large quantity of US equipment in Egypt's arsenal. The two countries enjoy a close relationship that is set to continue in the forecast period due to Egypt's dependence on the US companies for the maintenance and life support of its equipment and weapons. This relationship poses a greater roadblock for other foreign companies to enter the Egyptian defense market.
The Egyptian defense industry, which valued US$3.9 billion in 2012, is anticipated to record a CAGR of 1.78% over the forecast period and value US$4.15 billion by 2017. This growth is expected to be driven by the increased internal stability of the country following the political unrest and resultant need for modern military hardware, maintenance, and support. Egypt is expected to allocate 1.3% of its GDP for defense expenditure during the forecast period, despite its relatively small economy. However, it is also projected that the recent downturn in the country's economy, due to the political uprising, may bring about a change in the percentage of GDP the armed forces will spend across the forecast period.
Egypt's location in the Middle East and the presence of transnational terrorist organizations and radical groups in the country have encouraged it to spend considerable amounts on homeland security. In 2010, Egypt spent US$3.15 billion on internal security forces, an increase of US$323 million over the previous year. In the forecast period, homeland security spending is expected to increase due to factors including the threat of international terrorism, dangers to maritime security and the increased crime rate and growing sectarian violence that have followed the country's political crisis.
Egypt is expected to procure equipment to strengthen all branches of its armed forces. Procurements expected to be made during the forecast period include attack , transport and maritime patrol aircraft, attack and cargo helicopters, various weapon systems including anti-tank, anti-ship, air-to-air missiles and rockets, unmanned systems, C4ISR equipment, and engines, maintenance and support for the country's existing aircraft fleet. The air defense force has also been vigorously modernizing its Soviet air defense systems during the review period. As most of these systems are old, fleet wide upgradation and new procurements are expected to continue in the forecast period.