Future of the Afghan Defense Industry Market Attractiveness, Competitive Landscape and Forecasts to 2023
Summary
Afghanistan is emerging as one of the most interesting defense markets in Central and South Asia. The US invasion of Afghanistan after the September 2001 attacks led to the formation of a democratic government which is now putting focusing on the total revamp of its national infrastructure and defense industry. Its main objective is to have a strong, efficient and wellequipped armed force that can counter the Taliban insurgency and provide strong public security. These are the prime drivers of the Afghan government’s investment in the defense sector.
After the NATOled International Security Assistance Force (ISAF) left the country in 2014, Afghan security forces were made responsible for protecting the country. Afghanistan’s total defense expenditure decreased at a CAGR of 1.78% during the historic period, from US$6.4 billion in 2014 to US$6 billion in 2018. Around 34% of the national budget was allocated to security expenditure in 2017, however, the negative CAGR was caused by a decrease in foreign aid which previously benefitted the security sector.
The withdrawal of the International Security Assistance Force (ISAF) from Afghanistan in 2014 necessitated the need for a strong and efficient Afghan National Defense Security Forces (ANDSF). As a result, the Afghan government is expected to assign an average of 3.7% of its GDP to defense purposes over 20192023. The county is expected to acquire defense equipment such as light fighter aircraft, attack helicopters, small arms and ammunitions, and armored vehicles over the forecast period. Instability within the country’s political scene, along with internal security threats emerging from the growing human trafficking and drug trade, is expected to drive the Afghan government’s investments in homeland security over the forecast period. Police force modernization, border security and infrastructure development are expected to be the primary areas of focus.
The report "Future of the Afghan Defense Industry Market Attractiveness, Competitive Landscape and Forecasts to 2023" offers detailed analysis of Afghan 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 indepth analysis of the following
- Afghan defense industry market size and drivers: detailed analysis of Afghan defense industry during 20192023, 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. It also details the key challenges faced by defense market participants within the country
- Porter’s Five Force analysis of Afghan 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 Afghan defense industry. It provides an overview of key players, together with insights such as key alliances, strategic initiatives, and a brief financial analysis
Companies Mentioned General Dynamics Corporation, Sierra Nevada Corporation (SNC), Lockheed Martin, and MD Helicopters
Scope
- After the NATOled International Security Assistance Force (ISAF) left the country in 2014, Afghan security forces were made responsible for protecting the country. Afghanistan’s total defense expenditure decreased at a CAGR of 1.78% during the historic period, from US$6.4 billion in 2014 to US$6 billion in 2018. Around 34% of the national budget was allocated to security expenditure in 2017, however, the negative CAGR was caused by a decrease in foreign aid which previously benefitted the security sector.
- Over the forecast period, the procurement of weapons, construction of infrastructure, and acquisition of assets are expected to drive capital expenditure. The average share of revenue expenditure is expected to be 89.4% over the forecast period, higher than the average share of 84.8% during 20142018. The country’s increased focus on Afghan armed forces training sessions and better military personnel pay has resulted in a higher share of the defense budget being allocated to revenue expenditure, a trend expected to continue over 20192023.
- The MoD is expected to invest in landbased C4ISR, manportable and vehicular tactical communications, multimission helicopters, starionary tactical communication stations, and attack helicopters.
Reasons to buy
- This report will give the user confidence to make the correct business decisions based on a detailed analysis of Afghan 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 Afghan 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
1.1. What is this Report About?
1.2. Definitions
1.3. Summary Methodology
1.4. About the Publisher
2. Executive Summary
3. Market Attractiveness and Emerging Opportunities
3.1. Current Market Scenario
3.1.1. Primary Threat Perception
3.1.2. Military Doctrine and Strategy
3.1.3. Military Fleet Size
3.1.4. Procurement Programs
3.1.5. Social, Political and Economic Environment and Support for Defense Projects
3.1.6. Political and Strategic Alliances
3.2. Defense Market Size Historical and Forecast
3.2.1. Afghanistan’s defense expenditure is expected to grow at a CAGR of 3.03% over 2019-2023
3.2.2. US aid to Afghanistan is expected to increase over the forecast period
3.2.3. The resurgence of the Taliban, the ongoing war against terrorism and the capacity building of Afghan forces is expected to fuel defense expenditure over the forecast period
3.2.4. Afghan defense expenditure as a percentage of GDP expected to decrease considerably over the forecast period
3.3. Analysis of Defense Budget Allocation
3.3.1. Capital expenditure’s share is anticipated to decrease over forecast period
3.3.2. Capital expenditure expected to increase at a CAGR of 0.58% over the forecast period
3.3.3. Per capita defense expenditure anticipated to remain steady over the forecast period
3.4. Homeland Security Market Size and Forecast
3.4.1. Afghanistan’s homeland security budget is set to increase at a CAGR of 3.11% over the forecast period
3.4.2. Homeland security expenditure to be triggered by the country’s efforts to counter drug trade and human trafficking
3.4.3. Afghanistan is one of the most terror prone countries in the world
3.4.4. Afghanistan falls under “worst affected” terrorism category
3.4.5. Afghanistan has a terrorism index score of “9.4”
3.5. Benchmarking Against Key Global Markets
3.5.1. Afghanistan defense expenditure expected to grow significantly over forecast period
3.5.2. Afghanistan’s defense expenditure is low compared to other Asian countries
3.5.3. Afghanistan allocates a higher share of GDP to defense compared to other Asian countries
3.6. Market Opportunities: Key Trends and Growth Stimulators
3.6.1. Top 10 Defense Market Sectors by Value (US$ Million) - Projections over 2018-2023
3.6.2. Land-based C4ISR
3.6.3. Man-Portable Tactical Communications
3.6.4. Vehicular Tactical Communications
4. Defense Procurement Market Dynamics
4.1. Import Market Dynamics
4.1.1. Afghanistan relies on defense imports from foreign countries
4.1.2. The US emerged as the largest suppliers of arms
4.1.3. Armored vehicles and aircraft dominate Afghanistan’s military imports
4.2. Export Market Dynamics
4.2.1. Afghanistan’s domestic defense manufacturing is expected to be nil over the forecast period
5. Industry Dynamics
5.1. Five Forces Analysis
5.1.1. Bargaining Power of Supplier: Medium
5.1.2. Bargaining Power of Buyer: Medium
5.1.3. Barrier to Entry: Low
5.1.4. Intensity of Rivalry: Medium
5.1.5. Threat of Substitution: High
6. Market Entry Strategy
6.1. Budget process
6.2. Procurement Policy and Process
6.3. Market Regulation
6.3.1. Afghanistan has not disclosed an FDI policy or investment regulations
6.3.2. Offset obligation not disclosed by the government
6.4. Market Entry Route
6.4.1. Equipment manufacturers can enter the market through government-to-government deals
6.5. Key Challenges
6.5.1. Corruption and malpractices
6.5.2. Lack of skilled labor
6.5.3. Limited defense budget
7. Competitive Landscape and Strategic Insights
7.1. Competitive Landscape Overview
7.2. Key Companies
7.2.1. General Dynamics: Overview
7.2.2. General Dynamics: Products
7.2.3. General Dynamics: Recent Contract Wins
7.2.4. Sierra Nevada Corporation: Overview
7.2.5. Sierra Nevada Corporation: Products
7.2.6. Sierra Nevada Corporation: Recent Announcements and Strategic Initiatives
7.2.7. Sierra Nevada Corporation: Alliances
7.2.8. Sierra Nevada Corporation: Recent contract Wins
7.2.9. Lockheed Martin Corp.: Overview
7.2.10. Lockheed Martin Corp.: Products and Services
7.2.11. Lockheed Martin Corp.: Recent Announcements and Strategic Initiatives
7.2.12. Lockheed Martin Corp.: Recent Contract Wins
7.2.13. MD Helicopters: Overview
7.2.14. MD Helicopters: Products and Services
7.2.15. MD Helicopters: Recent Announcements and Strategic Initiatives
7.2.16. MD Helicopters: Recent Contract Wins
8. Business Environment and Country Risk
8.1. Economic Performance
8.1.1. GDP Per Capita
8.1.2. GDP, Current Prices (US$ Billion)
8.1.3. Local Currency Unit per US Dollar
8.1.4. Exports of Goods and Services (LCU)
8.1.5. Imports of Goods and Services (LCU)
8.1.6. Goods Exports as a Percentage of GDP
8.1.7. Goods Imports as a Percentage of GDP
8.1.8. Service Imports as a Percentage of GDP
8.1.9. Service Exports as a Percentage of GDP
8.1.10. Government Cash Surplus/Deficit as a Percentage of GDP
8.1.11. Net Foreign Direct Investment
8.1.12. Net Foreign Direct Investment as a Percentage of GDP
8.1.13. Mining, Manufacturing, Utilities Output
9. Appendix
9.1. About the Author
9.2. Disclaimer
List of Tables
Table 1: Afghanistan National Army (ANA) Strength
Table 2: Afghanistan Air Force (AAF) Strength
Table 3: Afghanistan Ongoing Procurement Programs
Table 4: Afghanistan Future Procurement Programs
Table 5: Top Afghan Defense Procurement Programs by Value (US$ Million) 2018-2023
Table 6: Afghanistan Defense Expenditure (AFN billion & US$ billion), 2014-2023
Table 7: US aid to Afghanistan (US$ Billion), 2014-2023
Table 8: Afghanistan GDP Growth vs. Defense Expenditure as a Percentage of GDP, 2014-2023
Table 9: Afghanistan Defense Budget Split Between Capital and Revenue Expenditure (%), 2014-2023
Table 10: Afghanistan Defense Capital Expenditure (AFN Billion and US$ Million), 2014-2023
Table 11: Afghanistan Per-Capita Defense Expenditure (US$), 2014-2023
Table 12: Afghanistan Defense Homeland Security Expenditure (AFN Billion and US$ Billion), 2014-2023
Table 13: Terrorism Index, 2018
Table 14: Benchmarking with Key Markets - 2014-2018 vs. 2019-2023
Table 15: Top Afghan Defense Market Sectors by Value (US$ Million) - 2018-2023
Table 16: Afghanistan Budget Preparation Process
Table 17: Top Defense Suppliers in the Afghan Defense Industry - By Value (US$ Million) 2018-2023
Table 18: Competitive Landscape of the Afghan Defense Market
Table 19: General Dynamics - Products
Table 20: General Dynamics - Recent Contract Wins
Table 21: Sierra Nevada Corporation - Products
Table 22: Sierra Nevada Corporation - Alliances
Table 23: Sierra Nevada Corporation - Recent Contract Wins
Table 24: Lockheed Martin Corp. - Products and Services
Table 25: Lockheed Martin Corp. - Recent Contract Wins
Table 26: MD Helicopters - Products and Services
Table 27: MD Helicopters - Recent Contract Wins
List of Figures
Figure 1: Afghanistan Defense Expenditure (AFN Billion), 2014-2023
Figure 2: Afghanistan Defense Expenditure (US$ Billion), 2014-2023
Figure 3: US Aid to Afghanistan (US$ Billion), 2014-2023
Figure 4: Afghanistan GDP Growth vs. Defense Expenditure as Percentage of GDP, 2014-2023
Figure 5: Afghanistan Budget Split Between Capital and Revenue Expenditure (%), 2014-2023
Figure 6: Afghanistan Defense Capital Expenditure (AFN Billion), 2014-2023
Figure 7: Afghanistan Defense Capital Expenditure (US$ Million), 2014-2023
Figure 8: Afghanistan Per-Capita Expenditure (US$), 2014-2023
Figure 9: Afghanistan Defense Homeland Security Expenditure (AFN Billion), 2014-2023
Figure 10: Afghanistan Defense Homeland Security Expenditure (US$ Billion), 2014-2023
Figure 11: Terrorism Heat Map, 2018
Figure 12: Terrorism Index, 2018
Figure 13: Benchmarking with Key Markets - 2014-2018 vs. 2019-2023
Figure 14: Defense Expenditure of the World’s Largest Military Spenders (US$ Billion), 2018 and 2023
Figure 15: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2018
Figure 16: Land-based C4ISR Market Size (US$ Million), 2018-2023
Figure 17: Man-Portable Tactical Communications Market Size (US$ Million), 2018-2023
Figure 18: Vehicular Tactical Communications Market Size (US$ Million), 2018-2023
Figure 19: Top Afghan Defense Procurements in Terms of Their Supplier Relationships
Figure 20: Afghanistan Defense Imports (US$ Million), 2013-2017
Figure 21: Afghanistan Defense Imports by Country (%), 2013-2017
Figure 22: Afghanistan Defense Imports by Weapon Category (%), 2013-2017
Figure 23: Industry Dynamics Porter’s Five Forces Analysis
Figure 24: Afghanistan GDP Per Capita, 2015-2025 (US$)
Figure 25: Afghanistan GDP, Current Prices (In US$ Billion), 2015-2025
Figure 26: Local Currency Unit per US$ - Exchange Rate, 2015-2024
Figure 27: Afghanistan Exports of Goods and Services (in LCU Billion), 2005-2014
Figure 28: Afghanistan Imports of Goods and Services (in LCU Billion), 2005-2014
Figure 29: Afghanistan Goods Exports as a Percentage of GDP, 2008-2013
Figure 30: Afghanistan Goods Imports as a Percentage of GDP, 2008-2013
Figure 31: Afghanistan Service Imports as a Percentage of GDP, 2008-2013
Figure 32: Afghanistan Service Exports as a Percentage of GDP, 2008-2013
Figure 33: Government Cash Surplus/Deficit as a Percentage of GDP (LCU), 2008-2012
Figure 34: Afghanistan Foreign Direct Investment, Net (current US$ Billion), 2008-2013
Figure 35: Afghanistan Net Foreign Direct Investment as a Percentage of GDP, 2008-2013
Figure 36: Afghanistan Mining, Manufacturing, Utilities Output (US$ Billion), 2005-2014
Samples
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Companies Mentioned (Partial List)
A selection of companies mentioned in this report includes, but is not limited to:
- General Dynamics Corporation
- Lockheed Martin
- MD Helicopters
- Sierra Nevada Corporation (SNC)
Methodology
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