Future of the South African Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2023

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Date: 06-Sep-2018
No. of pages: 116
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Summary

The Future of the South African Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2023, 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 South African 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 South African defense industry market size and drivers: detailed analysis of the South African defense industry during 2019-2023, 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

  • Import and Export Dynamics: analysis of prevalent trends in the country’s imports and exports over the last five years

  • Market opportunities:list of the top ten defense investment opportunities over the next 5 years

  • Competitive landscape and strategic insights: analysis of the competitive landscape of the South African defense industry.


Scope


  • South African military expenditure, which stands at US$3.9 billion in 2018, declined at a CAGR of -0.62% during 2014-2018.

  • However, it is anticipated to register a CAGR of 4.80% over the forecast period, to value US$4.9 billion in 2023.

  • The country is an active participant in stability and peacekeeping operations governed by the UN (United Nations), African Union, and the Southern African Development Community (SADC), and, as such, seeks higher expenditure for the defense sector.

  • The country also seeks to replace its aging military equipment and improve border security and surveillance, which are further expected to drive defense expenditure over the forecast period.

  • As a percentage of GDP, the country’s defense expenditure is expected to average 1.1% over the forecast period.


Reasons to buy


  • This report will give the user confidence to make the correct business decisions based on a detailed analysis of the South African 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 over the forecast period. The description includes technical specifications, recent orders, and the expected investment pattern by the country over the forecast period

  • Profiles of the top domestic and foreign defense manufacturers . This will provide the user with a total competitive landscape of the sector

  • A deep qualitative analysis of the South African defense industry covering sections including demand drivers, Key Trends , and latest industry contracts

Future of the South African Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2023

Table of Contents

1. Introduction 8
1.1. What is this Report About? 8
1.2. Definitions 8
1.3. Summary Methodology 10
1.4. About Strategic Defense Intelligence 11

2. Executive Summary 12

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 16
3.1.4. Procurement Programs 19
3.1.5. Top procurement programs by value (US$ million) 2018-2023 20
3.1.6. Social, political and economic environment and support for defense projects 21
3.1.7. Political and strategic alliances 22
3.2. Defense Market Size Historical and Forecast 23
3.2.1. South African defense expenditure expected to grow at a CAGR of 4.80% over the forecast period 23
3.2.2. Modernization initiatives, peacekeeping missions, and border security to drive defense expenditure 25
3.2.3. Military expenditure as a percentage of GDP is anticipated to increase over the forecast period 27
3.3. Analysis of Defense Budget Allocation 29
3.3.1. Capital expenditure share to remain constant over the forecast period 29
3.3.2. Capital expenditure anticipated to increase at a CAGR of 5.47% over the forecast period 31
3.3.3. ‘Other defense’ accounted for the largest percentage share of the overall defense budget 33
3.3.4. Army expenditure to grow at a modest pace over the forecast period 35
3.3.5. Per-capita defense expenditure expected to increase over the forecast period 39
3.4. Homeland Security Market Size and Forecast 40
3.4.1. Homeland security expenditure to grow at a CAGR of 4.36% over the forecast period 40
3.4.2. Homeland security expenditure to be driven by the rising threat of global terrorism and high violent crime rates 42
3.4.3. South Africa faces a ‘high level’ of threat from foreign terrorist organizations 43
3.4.4. South Africa has a score of 4.1 on the Terrorism Index 44
3.4.5. South Africa has a terrorism index score of 4.1 46
3.5. Benchmarking with Key Global Markets 47
3.5.1. South African defense expenditure expected to remain low compared to leading spenders 47
3.5.2. The country will continue to be a small player in the global defense market 49
3.5.3. South African defense expenditure as a percentage of GDP is lower than the majority of leading defense spenders 50
3.6. Market Opportunities: Key Trends and Growth Stimulators 51
3.6.1. Top 10 defense market categories by value (US$ million) - forecast-period projections 51
3.6.2. Infantry Fighting Vehicles: 52
3.6.3. Land-based C4ISR 53
3.6.4. Transport Aircraft: 54

4. Defense Procurement Market Dynamics 55
4.1. Import Market Dynamics 57
4.1.1. Defense imports expected to remain constant over the forecast period 57
4.1.2. Russia dominated South Africa’s defense imports during 2013-2017 58
4.1.3. Satellites were the main defense import during 2013-2017 59
4.2. Export Market Dynamics 60
4.2.1. Defense export value declined significantly during 2013-2017 60
4.2.2. The UAE held the largest share of South African defense exports during 2013-2017 61
4.2.3. Armored vehicles accounted for the majority of country’s defense exports 62

5. Industry Dynamics 63
5.1. Five Forces Analysis 63
5.1.1. Bargaining power of supplier: Low 64
5.1.2. Bargaining power of buyer: Medium 64
5.1.3. Barrier to entry: Medium 64
5.1.4. Intensity of rivalry: High 64
5.1.5. Threat of substitution: Medium 65

6. Market Entry Strategy 66
6.1. Market Regulation 66
6.1.1. Offset policy ensures support for local companies 66
6.1.2. Declining foreign direct investment inflows impact business environment 67
6.2. Market Entry Route 68
6.2.1. Budgeting Process 68
6.2.2. Procurement policy and process 69
6.2.3. Foreign OEMs find alternative routes into the market 69
6.2.4. Joint ventures and collaborations provide market entry opportunities 69
6.3. Key Challenges 70
6.3.1. Corruption and bribery 70
6.3.2. Lack of transparency 70
6.3.3. Lack of relevant defense policy 70

7. Competitive Landscape and Strategic Insights 71
7.1. Competitive Landscape Overview 71
7.2. Key Public Sector Companies 74
7.2.1. Denel: Overview 74
7.2.2. Denel: Major Products and Services 74
7.2.3. Denel: Recent announcements and strategic initiatives 76
7.2.4. Denel: Alliances 77
7.2.5. Denel: Recent contract wins 78
7.2.6. Ansys Limited: Overview 79
7.2.7. Ansys Limited: Major Products and Services 79
7.2.8. Ansys Limited: Alliances 79
7.2.9. Ansys Limited: Recent contract wins 80
7.2.10. Ansys Limited: Financial analysis 80
7.3. Key Private Sector Companies 82
7.3.1. Reutech: Overview 82
7.3.2. Reutech: Products and services 82
7.3.3. Reutech: Recent announcements and strategic initiatives 83
7.3.4. Reutech: Alliances 84
7.3.5. Reutech: Recent contract wins 84
7.3.6. Saab Grintek: Overview 85
7.3.7. Saab Grintek: Products and services 85
7.3.8. Saab Grintek: Recent announcements and strategic initiatives 85
7.3.9. Saab Grintek: Alliances 86
7.3.10. Saab Grintek: Recent contract wins 87
7.3.11. IVEMA: Overview 88
7.3.12. IVEMA: Products and services 88
7.3.13. IVEMA: Recent contract wins 88
7.3.14. Aerosud: Overview 89
7.3.15. Aerosud: Products and services 89
7.3.16. Aerosud: Recent announcements and strategic initiatives 89
7.3.17. Aerosud: Alliances 90
7.3.18. Aerosud: Recent contract wins 90
7.3.19. Global Armour: Overview 91
7.3.20. Global Armour: Products and services 91
7.3.21. Global Armour: Recent announcements and strategic initiatives 92
7.3.22. Global Armour: Alliances 93
7.3.23. Global Armour: Recent contract wins 93
7.3.24. Milkor (Pty) Ltd: overview 94
7.3.25. Milkor (Pty) Ltd.: products and services 94
7.3.26. Milkor (Pty) Ltd.: Recent announcements and strategic initiatives 94
7.3.27. Milkor (Pty) Ltd.: recent contract wins 95
7.3.28. Paramount Advanced Technologies: Overview 96
7.3.29. Paramount Advanced Technologies: Products and services 96
7.3.30. Paramount Advanced Technologies: Recent announcements and strategic initiatives 96
7.3.31. Paramount Advanced Technologies: Recent contract wins 97
7.3.32. Tellumat Defense: Overview 98
7.3.33. Tellumat Defense: Products and services 98
7.3.34. Tellumat Defense: Recent announcements and strategic initiatives 98
7.3.35. Tellumat Defense: Alliances 99
7.3.36. Tellumat Defense: Recent contract wins 99

8. Business Environment and Country Risk 100
8.1. Economic Performance 100
8.1.1. GDP Per Capita 100
8.1.2. GDP, Current Prices 101
8.1.3. Local Currency Unit per US$ 102
8.1.4. Exports of Goods and Services (LCU Billion) 103
8.1.5. Imports of Goods and Services (LCU Billion) 104
8.1.6. Gross National Disposable Income (US$ Billion) 105
8.1.7. Goods Exports as a Percentage of GDP 106
8.1.8. Goods Imports as a Percentage of GDP 107
8.1.9. Government Cash Surplus / Deficit as a Percentage of GDP 108
8.1.10. Service Imports as a Percentage of GDP 109
8.1.11. Service Exports as a Percentage of GDP 110
8.1.12. Foreign Direct Investments 111
8.1.13. Net Foreign Direct Investments as a Percentage of GDP 112
8.1.14. Market Capitalization of Listed Companies (US$ Billion) 113
8.1.15. Market Capitalization of Listed Companies as a Percentage of GDP 114
8.1.16. Mining, Manufacturing, and Utilities Output 115

9. Appendix 116
9.1. About SDI 116
9.2. Disclaimer 116

List of Tables

Table 1: South Africa’s Ground Forces Strength 16
Table 2: South Africa’s Navy Strength 17
Table 3: South Africa’s Air Force Strength 18
Table 4: South Africa - Ongoing Development and Procurement Programs 19
Table 5: South Africa - Future Procurement Programs 19
Table 6: South Africa - Defense Procurement Programs by Value (US$ Million) 2018-2023 20
Table 7: South African Defense Expenditure (ZAR Billion & US$ Billion), 2014-2023 23
Table 8: South African GDP Growth vs. Defense Expenditure as Percentage of GDP, 2014-2023 27
Table 9: South African Defense Budget Split Between Capital and Revenue Expenditure (%), 2014-2023 29
Table 10: South African Defense Capital Expenditure (ZAR Billion & US$ Billion), 2014-2023 31
Table 11: South African Defense Budget Share (%) Split by Services (Army, Navy, Air Force and Other), 2014-2023 33
Table 12: South African Defense Budget Allocations in ZAR Billion - Breakdown by Services (Army, Air Force, Navy and Others) 2014-2023 35
Table 13: South African Defense Budget Allocations in US$ Billion - Breakdown by Services (Army, Air Force, Navy and Others) 2014-2023 37
Table 14: South African Per-Capita Defense Expenditure (US$), 2014-2023 39
Table 15: South African Homeland Security Expenditure (ZAR Billion & US$ Billion), 2014-2023 40
Table 16: Terrorism Index, 2018 44
Table 17: Benchmarking with Key Markets - 2014-2018 vs. 2019-2023 47
Table 18: South Africa - 10 Leading Defense Market Categories by Value (US$ Million), 2018-2023 51
Table 19: Methodology for Offset Credits 66
Table 20: South Africa Budget Formation Timetable 68
Table 21: South Africa - Top Defense Suppliers by Value (US$ Million), 2018-2023 71
Table 22: Competitive Landscape of the South African Defense Industry 72
Table 23: Denel - Product Focus 74
Table 24: Denel - Alliances 77
Table 25: Denel - Recent Contract Wins 78
Table 26: Ansys Limited - Product Focus 79
Table 27: Ansys Limited - Alliances 79
Table 28: Ansys Limited - Recent Contract Wins 80
Table 29: Reutech - Product Focus 82
Table 30: Reutech - Alliances 84
Table 31: Reutech - Recent Contract Wins 84
Table 32: Saab Grintek - Product Focus 85
Table 33: Saab Grintek - Alliances 86
Table 34: Saab Grintek - Recent Contract Wins 87
Table 35: IVEMA - Product Focus 88
Table 36: IVEMA - Recent Contract Wins 88
Table 37: Aerosud - Product Focus 89
Table 38: Aerosud - Alliances 90
Table 39: Aerosud - Recent Contract Wins 90
Table 40: Global Armour- Major Products & Services 91
Table 41: Global Armour - Alliances 93
Table 42: Aerosud - Recent Contract Wins 93
Table 43: Milkor (Pty) - Major Products & Services 94
Table 44: Milkor (Pty), Ltd. - recent contract wins 95
Table 45: Paramount Advanced Technologies - Major Products and Services 96
Table 46: Paramount Advanced Technologies - Recent contract wins 97
Table 47: Tellumat Defense - Major Products and Services 98
Table 48: Tellumat Defense - Alliances 99
Table 49: Tellumat Defense- Recent Contract Wins 99

List of Figures

Figure 1: South African Defense Expenditure (ZAR Billion), 2014-2023 24
Figure 2: South African Defense Expenditure (US$ Billion), 2014-2023 24
Figure 3: South African GDP Growth vs. Defense Expenditure as a Percentage of GDP, 2014-2023 28
Figure 4: South African Defense Budget Split Between Capital and Revenue Expenditure (%), 2014-2023 30
Figure 5: South African Defense Capital Expenditure (ZAR Billion),2014-2023 32
Figure 6: South African Defense Capital Expenditure (US$ Billion), 2014-2023 32
Figure 7: South Africa - Defense Expenditure Allocation (%), 2014-2023 34
Figure 8: South African Defense Expenditure in ZAR Billion - Breakdown by Services (Army, Air Force, Navy and Others) 2014-2023 36
Figure 9: South African Defense Budget in US$ Billion - Breakdown by Services (Army, Navy, Air Force and Others) 2014-2023 38
Figure 10: South African Per-Capita Defense Expenditure (US$), 2014-2023 39
Figure 11: South African Homeland Security Budget (ZAR Billion), 2014-2023 41
Figure 12: South African Homeland Security Budget (US$ Billion), 2014-2023 41
Figure 13: Terrorism Heat Map, 2018 43
Figure 14: Terrorism Index, 2018 46
Figure 15: Benchmarking with Key Markets - 2014-2018 vs. 2019-2023 48
Figure 16: Defense Expenditure of the World’s Largest Military Spenders (US$ Billion), 2018 and 2023 49
Figure 17: Defense Expenditure as Percentage of GDP of Largest Military Spenders (%), 2018 50
Figure 18: Infantry Fighting Vehicles: Market Size (US$ Million), 2018-2023 52
Figure 19: Land-based C4ISR Market Size (US$ Million), 2018-2023 53
Figure 20: Transport Aircraft Market Size (US$ Million), 2018-2023 54
Figure 21: South Africa - Defense Procurements in Terms of Supplier Relationships, 2018 56
Figure 22: South African Defense Imports Trend (TIV Values), 2013-2017 57
Figure 23: South African Defense Imports by Country (%), 2013-2017 58
Figure 24: South African Defense Imports by Category (%), 2013-2017 59
Figure 25: South Africa Defense Exports Trend (TIV Values), 2013-2017 60
Figure 26: South African Defense Exports by Country (%), 2013-2017 61
Figure 27: South African’s Defense Exports by Category (%), 2013-2017 62
Figure 28: Industry Dynamics - Porter’s Five Forces Analysis 63
Figure 29: Ansys - Revenue Trend Analysis (2014-2018) 80
Figure 30: Ansys - Operating Income Trend Analysis (2014-2018) 81
Figure 31: Ansys - Net Income Trend Analysis (2014-2018) 81
Figure 32: South African GDP Per Capita (US$), 2015-2025 100
Figure 33: South African GDP Current Prices (US$ Billion), 2015-2025 101
Figure 34: South African LCU per US$ 2015-2024 102
Figure 35: South African Exports of Goods and Services (LCU Billion), 2005-2014 103
Figure 36: South African Imports of Goods and Services (LCU Billion), 2005-2014 104
Figure 37: South African Gross National Disposable Income (US$ Billion), 2005-2014 105
Figure 38: South African Good Exports as (% of GDP), 2005-2014 106
Figure 39: South African Good Imports as (% of GDP), 2005-2014 107
Figure 40: South African Goods Balance (% GDP), 2005-2012 108
Figure 41: South African Service Imports (% GDP), 2005-2014 109
Figure 42: South African Service Exports (% GDP), 2005-2014 110
Figure 43: South African Foreign Direct Investments (BoP, Current US$ Billion), 2005-2014 111
Figure 44: South African Net Foreign Direct Investments (% GDP), 2005-2014 112
Figure 45: South African Market Capitalization of Listed Companies (US$ Billion), 2005-2012 113
Figure 46: South African Market Capitalization of Listed Companies (% of GDP), 2005-2012 114
Figure 47: South African Mining, Manufacturing, and Utilities Output (US$ Billion), 2005-2014 115

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