Egypt -Defense and Security: Procurement drives defense expenditure (Strategy, Performance and Risk Analysis)
The aircraft category remains one of the key drivers of the Egyptian defense and security industry, accounting for 52.6% of capital expenditure in 2016; followed by the C4ISR electronics and IT category with 7.5%. Egypt’s total expenditure on defense and security stood at US$6.9 billion in 2016 and will post a forecast-period CAGR of 3.0% to reach US$7.9 billion by 2021, driven by modernization efforts to strengthen the nation’s military capabilities to counter threats from terrorist groups, Ethiopia, and to strengthen maritime security. The purchase of 24 Rafale fighters, FREMM frigates, and a large batch of MBDA missiles will drive expenditure.
MarketLine’s premium reports provide a comprehensive overview of each market within a country’s defense industry; benchmark key performance indicators against regional and global peers; review industry trends and drivers; evaluate the competitive landscape and innovation potential of singular markets; and conduct data-driven SWOT analysis to ascertain a structured assessment of the performance of each territory represented.Key Highlights
The country reported an increase in its imports:
Egypt’s defense imports posted a CAGR of 51.6%, rising from US$281.0 million in 2012 to US$1.4 billion in 2016. Imports spiked in 2010 when Egypt had to deal with the Arab Spring. When crisis levels reduced in 2012, there was a -55.4% decline in the country‘s import levels. The majority of Egypt‘s arms imports originate from the US. However, the country is expected to reduce its reliance and procure from European nations instead.
The country focuses on homeland security:
Increasing terrorist and cybersecurity threats drive homeland security expenditure. The country aims to strengthen land and maritime borders and, as a result, expenditure will increase at a CAGR of 2.8%, from US$450.0 million in 2017 to US$503.0 million in 2021. A significant amount will be allocated to police modernization and counter terrorist activities.
The country reported a decline in exports:
Due to a lack of R&D investment and a shortage of skilled laborers, the country‘s defense industry typically manufactures low-technology infantry weapons. Defense exports have suffered as the majority of Egypt‘s export markets are petroleum exporting economies and prefer to buy sophisticated weapons platforms from the US since this guarantees them a political and military partner.