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

 Published On: Aug, 2017 |    No of Pages: 94 |  Published By: SDI | Format: PDF
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Summary

The Future of the Algerian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022, published by Strategic Defence Intelligence, provides readers with detailed analysis of both historic and forecast defense industry values, factors influencing demand, the challenges faced by industry participants, analysis of industry leading companies, and key news.

Synopsis

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.

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 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 Algerian 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 Algerian defense industry. It provides an overview of key players, together with insights such as key alliances, strategic initiatives, and a brief financial analysis

Scope

- With a defense budget of US$10.3 billion in 2017, Algeria is currently the largest military spender in the African region and the world’s tenth largest defense importer of military goods. Military expenditure is strongly supported by the presence of the oil and natural gas industry, where the revenues are directed towards strengthening defense and security. 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 the armed forces are key factors to drive military expenditure. The instability in neighboring Libya, coupled with the rapid spread of the Islamic State (IS) in the country, has compelled Algeria to bolster its defenses and develop a robust defense posture.
- During 2013-2017, an average of 20% of the country’s total defense budget was allocated to capital expenditure, while an average of 80% was reserved for revenue expenditure. The capital expenditure share valued 19.6% in 2017, and is expected to marginally increase during the forecast period to reach 21.5% in 2022. This is primarily due to Algeria having initiated a broad range of military modernization programs, with explicit emphasis on developing the country’s domestic defense industrial capabilities. In 2016, the Algerian Government announced future modernization plans in order to develop a strong defense industry, much of which is expected to focus on domestic industrial capability development.
- The MoD is expected to invest in fighter and multi-role aircraft, transport aircraft, attack helicopters, and Armored Personnel Carrier (APC).

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
- 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 Algerian defense industry covering sections including demand drivers, Porter’s Five Forces Analysis, Key Trends and Growth Stimulators, and latest industry contracts
Table of Contents
1. Introduction 7
1.1. What is this Report About? 7
1.2. Definitions 7
1.3. Summary Methodology 9
1.4. About Strategic Defence Intelligence 10
2. Executive Summary 11
3. Market Attractiveness and Emerging Opportunities 13
3.1. Current Market Scenario 14
3.1.1. Primary Threat Perception 14
3.1.2. Military Doctrine and Strategy 15
3.1.3. Military Fleet Size 18
3.1.4. Procurement Programs 23
3.1.5. Social, Political, and Economic Environment and Support for Defense Projects 25
3.1.6. Political and Strategic Alliances 26
3.2. Defense Market Size: Historical and Forecast 27
3.2.1. Algeria’s defense budget to grow at an expected CAGR of 7.25% during 2018-2022 27
3.2.2. Rising threat of terrorism and an arms race in the region to drive Algeria’s defense expenditure 30
3.2.3. The defense budget as a percentage of GDP will remain at an average of 8.6% over the forecast period 32
3.3. Analysis of Defense Budget Allocation 34
3.3.1. Share of capital expenditure is expected to increase during the forecast period 34
3.3.2. Capital expenditure is expected to record a CAGR of 9.48% during the forecast period 36
3.3.3. Algeria’s per-capita defense expenditure is expected to increase during the forecast period 38
3.4. Homeland Security Market Size and Forecast 40
3.4.1. The homeland security market in Algeria is expected to decline at a CAGR of 1.94% during the forecast period 40
3.4.2. Human trafficking and drug trafficking form the main components of homeland security expenditure 42
3.4.3. Algeria is at high risk from external and internal threats 43
3.4.4. Algeria faces “high risk” from acts of terrorism 45
3.4.5. Algeria has a terrorism index score of 4.3 47
3.5. Benchmarking with Key Global Markets 48
3.5.1. Algerian defense expenditure is expected to remain low compared to leading spenders 48
3.5.2. Algeria will continue to remain a small contributor in the global arms market 50
3.5.3. Defense budget as a percentage of GDP is expected to remain low over the forecast period 51
3.6. Market Opportunities: Key Trends and Drivers 52
3.6.1. Multi−role Aircraft 52
3.6.2. Transport Aircraft 53
3.6.3. Attack Helicopters 54
3.6.4. Armored Personnel Carrier (APC) 55
4. Defense Procurement Market Dynamics 56
4.1. Import Market Dynamics 57
4.1.1. Defense imports increased during 2012−2016 57
4.1.2. China, the US, Germany, and Italy are the major defense equipment suppliers for Algeria 58
4.1.3. Aircraft, armored vehicles, and naval vessels accounted for a total share of 78.5% in Algerian defense imports 60
4.2. Export Market Dynamics 61
4.2.1. Algeria does not export arms due to an undeveloped domestic arms industry 61
5. Industry Dynamics 62
5.1. Five Forces Analysis 62
5.1.1. Bargaining power of the supplier: low to medium 63
5.1.2. Bargaining power of the buyer: medium 63
5.1.3. Barriers to entry: high 63
5.1.4. Intensity of rivalry: low to medium 63
5.1.5. Threat of substitution: high 64
6. Market Entry Strategy 65
6.1. Market Regulation 65
6.1.1. Formal offset policy to be drafted to ensure growth of the country’s domestic defense manufacturing industry 65
6.1.2. Foreign direct investment in defense 65
6.2. Market Entry Route 66
6.2.1. Budget process 66
6.2.2. Defense procurement process 67
6.2.3. Collaborations provide market entry opportunities 68
6.2.4. Government-to-government agreements are the preferred market entry route for foreign OEMs 68
6.3. Key Challenges 69
6.3.1. Corruption and lack of transparency pose an obstacle for market entry 69
6.3.2. Lack of relevant defense procurement policy 69
7. Competitive Landscape and Strategic Insights 70
7.1. Competitive Landscape Overview 70
7.1.1. Foreign suppliers manufacture defense systems overseas and deliver to Algeria 70
7.1.2. Rosoboronexport: overview 71
7.1.3. Rosoboronexport: products 71
7.1.4. Rosoboronexport: recent announcements and strategic initiative 71
7.1.5. Rosoboronexport: alliances 72
7.1.6. Rosoboronexport: recent contract wins 73
7.2. Key Domestic Companies 74
7.2.1. Entreprise Nationale des Véhicules Industriels: overview 74
7.2.2. Entreprise Nationale des Véhicules Industriels Vehicles: products and services 74
7.2.3. Entreprise Nationale des Véhicules Industriels: recent announcements and strategic initiatives 74
7.2.4. Entreprise Nationale des Véhicules Industriels: alliances 75
7.2.5. NIMR-Algerie Joint Stock Company: overview 76
7.2.6. NIMR-Algerie Joint Stock Company: products 76
7.2.7. Khenchela Mechanical Constructions Establishment (ECMK): overview 77
7.2.8. Khenchela Mechanical Constructions Establishment: products 77
7.2.9. Khenchela Mechanical Constructions Establishment: recent announcements and strategic initiatives 77
7.2.10. Khenchela Mechanical Constructions Establishment: alliances 77
7.2.11. Seriana Company of Industrial Achievements (ERIS): overview 78
7.2.12. Seriana Company of Industrial Achievements: products 78
7.2.13. National Office of Explosive Substances, EPE (ONEX): overview 79
7.2.14. National Office of Explosive Substances: products 79
8. Business Environment and Country Risk 80
8.1. Economic Performance 80
8.1.1. GDP Per-Capita At Constant Prices (US$) 80
8.1.2. GDP at Current Prices (US$ Billions) 81
8.1.3. Exports of Goods and Services, Local Currency Unit (LCU Billions) 82
8.1.4. Imports of Goods and Services, Local Currency Unit (LCU Billions) 83
8.1.5. Gross National Disposable Income (US$ Billions) 84
8.1.6. Local Currency Unit (LCU) per US$ (Period Average) 85
8.1.7. Government Cash Surplus/Deficit as a Percentage of GDP, local currency unit (LCU) 86
8.1.8. Goods Exports as a Percentage of GDP 87
8.1.9. Goods Imports as a Percentage of GDP 88
8.1.10. Services Imports as a Percentage of GDP 89
8.1.11. Services exports as a percentage of GDP 90
8.1.12. Foreign Direct Investment, Net (Balance of Payments or BoP, Current US$ Billions) 91
8.1.13. Net Foreign Direct Investment as a Percentage of GDP 92
8.1.14. Mining, Manufacturing, Utilities Output (Local Currency Units or LCU, Billions) 93
9. Appendix 94
9.1. About SDI 94
9.2. Disclaimer 94

List of Tables
Table 1: Algerian Army Strength 18
Table 2: Algerian Navy Strength 20
Table 3: Algerian Air Force Strength 21
Table 4: Algeria - Ongoing Development and Procurement Programs 23
Table 5: Algerian - Future Procurement Programs 24
Table 6: Algerian Defense Expenditure (DZD Billions & US$ Billions), 2013-2022 28
Table 7: Algerian GDP Growth and Defense Expenditure as Percentage of GDP Growth, 2013-2022 32
Table 8: Algerian Defense Budget Split Between Capital and Revenue Expenditure (%), 2013-2022 34
Table 9: Algerian Defense Capital Expenditure (DZD Billions and US$ Billions), 2013-2022 36
Table 10: Algerian Per Capita Defense Expenditure (US$), 2013-2022 38
Table 11: Algerian Homeland Security Expenditure (DZD Billions & US$ Billions), 2013-2022 40
Table 12: Terrorism Index, 2017 45
Table 13: Benchmarking with Key Markets - 2013-2017 vs. 2018-2022 48
Table 14: Algerian Budget Planning Process 66
Table 15: Competitive Landscape of the Algerian Defense Industry 70
Table 16: Rosoboronexport - Product Focus 71
Table 17: Rosoboronexport - Alliances 72
Table 18: Rosoboronexport - Recent Contract Wins 73
Table 19: Entreprise Nationale des Véhicules Industriels - Product Focus 74
Table 20: Entreprise Nationale des Véhicules Industriels - Alliances 75
Table 21: NIMR-Algerie - Product Focus 76
Table 22: Khenchela Mechanical Constructions Establishment - Product Focus 77
Table 23: Khenchela Mechanical Constructions Establishment (ECMK) - Alliances 77
Table 24: Seriana Company of Industrial Achievements - Product Focus 78
Table 25: National Office of Explosive Substances: Products 79

List of Figures
Figure 1: Algerian Defense Expenditure (DZD Billions), 2013-2022 28
Figure 2: Algerian Defense Expenditure (US$ Billions), 2013-2022 29
Figure 3: Algeria’s GDP Growth and Defense Expenditure as Percentage of GDP Growth, 2013-2022 33
Figure 4: Algerian Defense Budget Split Between Capital and Revenue Expenditure (%), 2013-2022 35
Figure 5: Algerian Defense Capital Expenditure (DZD Billions), 2013-2022 37
Figure 6: Algerian Defense Capital Expenditure (US$ Billions), 2013-2022 37
Figure 7: Algerian Per Capita Defense Expenditure (US$), 2013-2022 39
Figure 8: Algerian Homeland Security Expenditure (DZD Billions), 2013-2022 41
Figure 9: Algerian Homeland Security Expenditure (US$ Billions), 2013-2022 41
Figure 10: Terrorism Heat Map, 2017 44
Figure 11: Terrorism Index, 2017 47
Figure 12: Benchmarking with Key Markets, 2013-2017 vs. 2018-2022 49
Figure 13: Defense Expenditure of the World’s Largest Military Spenders (US$ Billions), 2017 and 2022 50
Figure 14: Defense Expenditure as a Percentage of GDP of the Largest Military Spenders (%), 2017 51
Figure 15: Multi−role Aircraft Market Size (US$ Millions), 2017-2027 52
Figure 16: Transport Aircraft Market Size (US$ Millions), 2017-2023 53
Figure 17: Attack Helicopters Market Size (US$ Millions), 2017-2027 54
Figure 18: Algeria’s Armored Personnel Carrier Market Size (US$ Millions), 2017-2027 55
Figure 19: Algeria Defense Import Trend (US$ Millions), 2012-2016 (TIV values*) 57
Figure 20: Algerian Defense Import by Country (%), 2012-2016 59
Figure 21: Algerian Defense Imports by Category (%), 2012-2016 60
Figure 22: Industry Dynamics Porter’s Five Forces Analysis 62
Figure 23: Algeria’s GDP Per Capita at Constant Prices (US$), 2015-2025 80
Figure 24: Algeria’s GDP at Current Prices (US$ Billions), 2015-2025 81
Figure 25: Algeria’s Exports of Goods and Services (LCU Billions), 2005-2014 82
Figure 26: Algerian Imports of Goods and Services (LCU Billions), 2005-2014 83
Figure 27: Algeria’s Gross National Disposable Income (US$ Billions), 2005-2014 84
Figure 28: Algeria’s LCU per US$, 2015-2024 85
Figure 29: Algeria−Government cash surplus/deficit as % of GDP (DZD), 2005-2011 86
Figure 30: Algeria − Goods Exports as a % of GDP (%), 2005-2014 87
Figure 31: Algeria − Goods Exports as a % of GDP (%), 2005-2014 88
Figure 32: Algeria− Services Imports as a % of GDP (%), 2005-2013 89
Figure 33: Algeria − Services Exports as a % of GDP (%), 2005-2013 90
Figure 34: Algeria − Foreign Direct Investment, net (BoP, current US$ Billions), 2005-2013 91
Figure 35: Algeria’s Net Foreign Direct Investment as % of GDP, 2005-2013 92
Figure 36: Algeria’s Mining, Manufacturing, Utilities Output LCU Billions, 2005-2014 93

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