Naperville, IL -- (SBWire) -- 10/02/2013 --Reportstack, provider of premium market research reports announces the addition of Future of the Egyptian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018 market report to its offering
Product Synopsis
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.
Introduction and Landscape
Why was the report written?
The Future of the Egyptian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018 offers the reader an insight into the market opportunities and entry strategies adopted by foreign original equipment manufacturers (OEMs) to gain market share in the Egyptian defense industry.
What is the current market landscape and what is changing?
Egypt is a major non-NATO ally of the US and for the past three decades, has been receiving Foreign Military Financing (FMF) from the US, amounting to US$1.3 billion per year. This FMF is used to fund the majority of the country's capital expenditure and comes with a clause that 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 its arsenal is produced by US. 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. However, following the ousting of Egypt's elected President, Mohammed Morsi, through a military coup in 2013, the US is reviewing its FMF to Egypt. Nevertheless, the country's own defense budget is expected to increase over the forecast period, growing at a CAGR of 7.47%.
What are the key drivers behind recent market changes?
Although Egypt is safe from any threat of aggression from its neighbors, the perceived threat from Israel, along with the ongoing volatile political scenario of the country and ammunition modernization, are areas of focus for the military, and these factors are expected to drive and determine the country's defense expenditure during the forecast period.
What makes this report unique and essential to read?
The Future of the Egyptian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018 provides detailed analysis of the current industry size and growth expectations from 2014 to 2018, 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.
Key Features and Benefits
The report provides detailed analysis of the current industry size and growth expectations from 2014 to 2018, 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 in Egypt. 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.
Key Market Issues
From 1956 to 1970, Egypt was under military rule under the presidency of Gamal Abdel Nasser, a situation that continued when Nasser was replaced with Anwar Sadat following Nasser's death in 1970. From 1956 until 1979, when Sadat was instrumental in the signing of an Arab-Israeli peace agreement, Egypt's military spending was solely dictated by its hostile relationship with Israel. Since Sadat, Egypt has been under an authoritarian regime, a situation that is still the case despite the popular uprising in the country. As a result, 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. It also does not currently disclose its defense budget and does not account for a substantial amount of the US FMF it receives, although it is estimated that a third of this is spent on maintenance and upgrades. 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; a process that began with political protests on January 25 2011, which led to the fall of the country's authoritarian regime and the promise of democratic presidential elections in November 2011, with a military council ruling the country in the interim period. As a result of this period of dramatic change, the country is currently characterized by political instability; the lack of an organized police force has led to an increase in sectarian violence and human rights violations, while the lack of a long-term government has resulted in a limited ability to formulate and implement long-term plans and has contributed to a lack of policy regarding defense procurement. 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. In order to keep the Egyptian defense industry and the country's armed forces up to date, Egypt's new government must, in collaboration with the country's military, undertake substantial coordinated efforts to foster stability and promote foreign participation.
Key Highlights
Perceived threats: Though Egypt and Israel signed a peace treaty in 1979 that both nations are currently adhering to, a substantial number of political parties and military figures in Egypt still consider Israel to be the main threat to the country, a feeling that pervades due to the longstanding enmity between the two countries and the five wars fought between them between 1948 and 1973. The 1979 peace treaty was brokered by the US and was designed to bring stability to the region; it has also made Egypt a powerful US ally in the Middle East. Under the terms of the agreement the US provides FMF to both countries, US$3 billion per year to Israel and US$1.3 billion per year to Egypt. With the recent militant disturbance in the Sinai region, the need for Egypt to maintain a strong military presence in the region has increased. This makes up one of the main components of the Egyptian defense budget.
Political stalemate and increasing crime rate: After years of revolution, Hosni Mubarak was ousted from the position held for 30 years. Through Egypt's first democratic elections in 2012, Mohammed Morsi was elected as the president, only to be dismissed from power in July2013. This led to a number of political uprisings across the nation, forcing the military-backed leadership to declare a state of emergency and enforce a night curfew for a month. The vacuum at the highest governmental level has created a power struggle between the military, judiciary, and many other political parties. Although an election is expected to take place in early 2014, the scenario remains highly unpredictable. This vulnerability with the nation has increased the crime rate in the last two years. This is primarily caused by the absence of an adequate police force, due to dismantling of the State Security Investigation service (SSIS), during and after the outbreaks. With the formation of the National Security Force that holds the task of combating terrorism and maintaining internal security, the situation is expected to get better in the coming years. In September, the country's security forces re-imposed state control over the town of Kerdasa, after arresting dozens of Islamist supporters protesting in favor of President Morsi. In the forecast period this newly established organization will require further restructuring and substantial funding for training and arming purposes.
Egypt's domestic defense industry is able to fulfill the EAF's low and mid-technology requirements, while the country relies on imports from foreign OEMs to provide technologically advanced equipment and support for its armed forces. The majority of these imports are sourced from the US, which met 70% of Egyptian import requirements during the review period; in the forecast period this situation is expected to continue due to the close diplomatic relationship enjoyed by the two countries. While the US dominates this market, Egypt also has supplier relationships with Chinese, Russian, and European defense manufacturers for a variety of military equipment. In addition, Egypt has a growing domestic defense industry, which manufactures ammunition, rockets, anti-tank missiles, armored vehicles, and other military goods, and exports defense products mainly to markets in the Middle East and North Africa.
Companies Mentioned
Abu Zaabal tank repair factory, Helwan Factory for Developed Industries
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Future of the Egyptian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018