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Future of the South African Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2021

Published: May 30, 2016 | Pages: 108 | Publisher: Strategic Defence Intelligence | Industry: Defense | Report Format: Electronic (PDF)

Summary

The South African defense budget values US$4.1 billion in 2016, dropping from US$4.6 billion in 2012, and registered a CAGR of -2.56% during 2012-2016. Even though the actual budget increased in local currency, it showed a downward trend in terms of dollar value owing to variations in the exchange rate. However, modest growth in defense expenditure is expected during the forecast period at a CAGR of 1.83%, to reach a value US$4.6 billion in 2021. The country's defense budget is mainly driven by factors such as modernization initiatives, participation in peacekeeping missions, and border security challenges.

Key Findings

- During 2012-2016, South African defense expenditure registered a growth rate of -2.56%,decreasing from US$4.6billion in 2012 to US$4.1 billion in 2016
- South African military expenditure, valued at US$4.1billion in 2016, is expected to increase to US$4.6 billion by 2021, registering a CAGR of 1.83% over the forecast period
- South African military expenditure will be driven by the country's participation in peacekeeping programs, border security challenges, and a focus on the modernization of its armed forces
- The Defense Ministry is expected to procure Naval Vessels, Transport Aircraft, and MIL-IT Software and Hardware

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 2017-2021, 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 the army, navy, and air force. It also details the key challenges faced by defense market participants within the country
- Porter's Five Force analysis of the South African 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 coming 10 years
- Competitive landscape and strategic insights: analysis of the competitive landscape of the South African defense industry. It provides an overview of key players, together with insights such as key alliances, strategic initiatives, and a brief financial analysis

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 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 South African defense industry covering sections including demand drivers, Porter's Five Forces Analysis, Key Trends and Growth Stimulators, and latest industry contracts.
 Table of Content

1. Introduction 
1.1. What is this Report About? 
1.2. Definitions 
1.3. Summary Methodology 
1.4. SDI Research Terrorism Index 
1.5. About Strategic Defence Intelligence

2. Executive Summary

3. Market Attractiveness and Emerging Opportunities 
3.1. Defense Market Size Historical and Forecast
3.1.1. South African defense expenditure expected to grow at a CAGR of XX% over the forecast period 
3.1.2. Modernization initiatives, peacekeeping missions, and border security expected to drive defense expenditure 
3.1.3. Military expenditure as a percentage of GDP is expected to increase during the forecast period 
3.2. Analysis of Defense Budget Allocation 
3.2.1. Capital expenditure share to remain constant over the forecast period 
3.2.2. Capital expenditure expected to increase over the forecast period 
3.2.3. „Others‟ Defense accounted for the largest percentage share of the overall defense budget 
3.2.4. Army expenditure to grow at a modest pace over the forecast period 
3.2.5. Naval expenditure expected to grow at a CAGR of XX% during the forecast period 
3.2.6. Air force expenditure expected to increase over the forecast period 
3.2.7. Per-capita defense expenditure expected to increase over the forecast period 
3.3. Homeland Security Market Size and Forecast 
3.3.1. Homeland security (HLS) expenditure expected to value US$XX billion in 2021 
3.3.2. Homeland security expenditure to be driven by rising threat of global terrorism and high violent crime rates…
3.3.3. South Africa faces a high level of threat from foreign terrorist organizations 
3.3.4. South Africa has a score of XX on the Terrorism Index 
3.4. Benchmarking with Key Global Markets 
3.4.1. South African defense expenditure expected to remain low compared to leading spenders 
3.4.2. The country will continue to be a small player in the global defense market 
3.4.3. South African defense expenditure as a percentage of GDP is lower than the majority of leading defense spenders 
3.4.4. South Africa faces negligible threat from foreign terrorist organizations 
3.5. Market Opportunities: Key Trends and Growth Stimulators 
3.5.1. Naval Vessels: 
3.5.2. Transport Aircraft: 
3.5.3. MIL IT-Software:

4. Defense Procurement Market Dynamics 
4.1. Import Market Dynamics 
4.1.1. Defense imports expected to remain constant during the forecast period 
4.1.2. Sweden dominated South African defense imports during 2010-2014 
4.1.3. Aircraft were the major defense imports during 2010-2014 
4.2. Export Market Dynamics 
4.2.1. Defense export value declined significantly during 2011-2015 
4.2.2. Ecuador dominates South African defense export market during 2011-2015 
4.2.3. Armored vehicles accounted for the majority of country‟s defense exports

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

6. Market Entry Strategy 
6.1. Market Regulation 
6.1.1. Offset policy ensures support for local companies 
6.1.2. FDI is channeled to benefit local business 
6.2. Market Entry Route 
6.2.1. Foreign OEMs find alternative routes into the market 
6.2.2. Joint ventures and collaborations provide market entry opportunities 
6.3. Key Challenges 
6.3.1. Corruption and bribery 
6.3.2. Lack of transparency 
6.3.3. Lack of relevant defense policy

7. Competitive Landscape and Strategic Insights 
7.1. Competitive Landscape Overview 
7.2. Key Private Sector Companies 
7.2.1. Denel: overview 
7.2.2. Denel: Major Products and Services 
7.2.3. Denel: recent announcements and strategic initiatives 
7.2.4. Denel: alliances 
7.2.5. Denel: recent contract wins 
7.2.6. Denel: financial analysis 
7.2.7. Ansys Limited: overview 
7.2.8. Ansys Limited: Major Products and Services 
7.2.9. Ansys Limited: alliances 
7.2.10. Ansys Limited: Recent Contract Wins 
7.2.11. Ansys Limited: financial analysis 
7.3. Key Private Sector Companies 
7.3.1. Reutech: overview 
7.3.2. Reutech: products and services 
7.3.3. Reutech: recent announcements and strategic initiatives 
7.3.4. Reutech: alliances 
7.3.5. Reutech: recent contract wins 
7.3.6. Saab Grintek: overview
7.3.7. Saab Grintek: products and services 
7.3.8. Saab Grintek: recent announcements and strategic initiatives 
7.3.9. Saab Grintek: alliances 
7.3.10. Saab Grintek: recent contract wins 
7.3.11. Land Systems South Africa: overview 
7.3.12. Land Systems South Africa: products and services 
7.3.13. Land Systems South Africa: recent announcements and strategic initiatives. 
7.3.14. Land Systems South Africa: alliances 
7.3.15. Land Systems South Africa: recent contract wins 
7.3.16. IVEMA: overview 
7.3.17. IVEMA: products and services 
7.3.18. IVEMA: recent contract wins 
7.3.19. Aerosud: overview 
7.3.20. Aerosud: products and services 
7.3.21. Aerosud: recent announcements and strategic initiatives 
7.3.22. Aerosud: alliances 
7.3.23. Aerosud: recent contract wins 
7.3.24. Turbomeca Africa: overview 
7.3.25. Turbomeca Africa: products and services 
7.3.26. Turbomeca Africa: alliances 
7.3.27. Turbomeca Africa: recent contract wins 
7.3.28. Global Armour: overview 
7.3.29. Global Armour: products and services 
7.3.30. Global Armour: recent announcements and strategic initiatives 
7.3.31. Global Armour: alliances
7.3.32. Global Armour: recent contract wins 
7.3.33. Milkor (Pty) Ltd: overview 
7.3.34. Milkor (Pty) Ltd.: products and services 
7.3.35. Milkor (Pty) Ltd.: recent announcements and strategic initiatives 
7.3.36. Milkor (Pty) Ltd.: recent contract wins 
7.3.37. Paramount Advanced Technologies: overview 
7.3.38. Paramount Advanced Technologies: products and services 
7.3.39. Paramount Advanced Technologies: recent announcements and strategic initiatives 
7.3.40. Paramount Advanced Technologies: recent contract wins 
7.3.41. Tellumat Defence: Overview 
7.3.42. Tellumat Defence: products and services 
7.3.43. Tellumat Defence: Recent announcements and strategic initiatives 
7.3.44. Tellumat Defence: Alliances 
7.3.45. Tellumat Defense: 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 
8.1.3. Local Currency Unit per USD 
8.1.4. Exports of Goods and Services (LCU) 
8.1.5. Imports of Goods and Services (LCU) 
8.1.6. Gross National Disposable Income (USD Bn) 
8.1.7. Goods Exports as % of GDP 
8.1.8. Goods Imports as % of GDP 
8.1.9. Government Cash Surplus/Deficit as % of GDP 
8.1.10. Service Imports as % of GDP 
8.1.11. Service Exports as % of GDP 
8.1.12. Foreign Direct Investments 
8.1.13. Net Foreign Direct Investments as % of GDP 
8.1.14. Market Capitalization of listed companies (US$ Bn) 
8.1.15. Market Capitalization of listed companies as % of GDP 
8.2. Minerals 
8.2.1. Mining, Manufacturing, Utilities Output

9. Appendix 
9.1. About SDI 
9.2. Disclaimer
List of Tables

Table 1: South African Defense Expenditure (ZAR andUS$ Billion), 2012-2021 
Table 2: South African GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP Growth, 2012-2021 
Table 3: South African Defense Budget Split Between Capital and Revenue Expenditure (%), 2012-2021 
Table 4: South African Defense Capital Expenditure (US$ Billion), 2012-2021 
Table 5: South African Defense Budget Split Between Army, Navy, Air Force and Others, 2012-2021 
Table 6: South African Defense Expenditure budget for Army (ZARandUS$ billion), 2012-2021 
Table 7: South African Defense Expenditure budget for Navy (ZAR andUS$ billion), 2012-2021 
Table 8: South African Defense Expenditure budget for Air Force (ZAR andUS$ billion), 2012-2021 
Table 9: South African Per-Capita Defense Expenditure (US$), 2012-2021 
Table 10: South African Defense Expenditure (ZAR andUS$ Billion), 2012-2021 
Table 11: Benchmarking with Key Markets - 2012-2016 vs. 2017-2021
Table 12: SDI Terrorism Index 
Table 13: Methodology for Offset Credits 
Table 14: Denel - Product Focus 
Table 15: Denel - Alliances 
Table 16: Denel - Recent Contract Wins 
Table 17: Ansys Limited - Product Focus 
Table 18: Ansys Limited - Alliances 
Table 19: Ansys Limited - Recent Contract Wins 
Table 20: Reutech - Product Focus 
Table 21: Reutech - Alliances 
Table 22: Reutech - Recent Contract Wins 
Table 23: Saab Grintek - Product Focus 
Table 24: Saab Grintek - Alliances 
Table 25: Saab Grintek - Recent Contract Wins 
Table 26: Land Systems South Africa - Product Focus 
Table 27: Land Systems South Africa - Alliances 
Table 28: Land Systems South Africa - Recent Contract Wins 
Table 29: IVEMA - Product Focus 
Table 30: IVEMA - Recent Contract Wins 
Table 31: Aerosud - Product Focus 
Table 32: Aerosud - Alliances 
Table 33: Aerosud - Recent Contract Wins 
Table 34: Turbomeca Africa - Product Focus 
Table 35: Turbomeca Africa - Alliances 
Table 36: Turbomeca Africa - Recent Contract Wins 
Table 37: Global Armour- Major Products and Services 
Table 38:Global Armour- Alliances 
Table 39: Aerosud - Recent Contract Wins 
Table 40: Milkor (Pty) - Major Products and Services 
Table 41: Milkor (Pty), Ltd. - recent contract wins 
Table 42: Paramount Advanced Technologies - Major Products and Services 
Table 43: Paramount Advanced Technologies - Recent contract wins 
Table 44: Tellumat Defence- Major Products and Services 
Table 45: Tellumat Defence- Alliances 
Table 46: Tellumat Defence- Recent contract wins 


List of Figures

Figure 1: South African Defense Expenditure (ZAR Billion), 2012-2021 
Figure 2: South African Defense Expenditure (US$ Billion), 2012-2021 
Figure 3: South African GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as a Percentage of GDP Growth, 2012-2021 18
Figure 4:South African Defense Budget Split Between Capital and Revenue Expenditure (%), 2012-2021 
Figure 5: South African Defense Capital Expenditure (ZAR billion), 2012-2021 
Figure 6: South African Defense Capital Expenditure (US$ billion), 2012-2021 
Figure 7: South African Defense budget Split Between Army, Navy, Air Force and Others, 2012-2021
Figure 8: South African Defense Expenditure budget for Army (ZAR billion), 2012-2021 
Figure 9: South African Defense Expenditure budget for Army (US$ billion), 2012-2021 
Figure 10: South African Defense Expenditure for Navy (ZAR Billion), 2012-2021 
Figure 11: South African Defense Expenditure for Navy (US$ million), 2012-2021
Figure 12: South African Defense Expenditure for Air Force (ZAR Billion), 2012-2021 
Figure 13: South African Defense Expenditure for Air Force (US$ million), 2012-2021 
Figure 14: South African Per-Capita Defense Expenditure (US$), 2012-2021 
Figure 15: South African Homeland Security Budget (ZAR Billion), 2012-2021 
Figure 16: South African Homeland Security Budget (US$ Billion), 2012-2021 
Figure 17: SDI Terrorism Heat Map, 2016 
Figure 18: SDI Terrorism Index, 2016 
Figure 19: Benchmarking with Key Markets - 2012-2016 vs. 2017-2021 
Figure 20: Defense Expenditure of the World‟s Largest Military Spenders (US$ Billion), 2016and 2021 
Figure 21: Defense Expenditure as Percentage of GDP of Largest Military Spenders (%), 2016 
Figure 22: Naval Vessels Market Size (US$ Million), 2016-2026 
Figure 23: Transport Aircraft Market Size(US$ Million), 2016-2026 
Figure 24: MIL-IT Software Market Size (US$ Million), 2016-2026 
Figure 25: South Africa Defense Imports Trend, 2010-2014 
Figure 26: South African Defense Imports by Country (%), 2010-2014 
Figure 27: South African Defense Imports by Category (%), 2010-2014 
Figure 28: South Africa Defense Exports Trend, 2011-2015 
Figure 29: South African Defense Exports by Country (US$ million), 2011-2015 
Figure 30: South African‟s Defense Exports by Category (%), 2011-2015 
Figure 31: Industry Dynamics Porter‟s Five Forces Analysis 
Figure 32: Denel -Revenue Trend Analysis (2010-2014) 
Figure 33: Denel -Net Profit Trend Analysis (2010-2014) 
Figure 34: Ansys-Revenue Trend Analysis (2010-2014) 
Figure 35: Ansys -Net Profit Trend Analysis (2010-2014) 
Figure 36: South African GDP Per Capita, 2015-2025 
Figure 37: South African GDP Current Prices, 2015-2025 
Figure 38: South African LCU per USD, 2015-2024 
Figure 39: South African Exports of Goods and Services (LCU), 2005-2014 
Figure 40: South African LCU per USD, 2005-2014 
Figure 41: South African Gross National Disposable Income (USD Bn), 2005-2014 
Figure 42:South African Good Exports as (% of GDP), 2005-2014 
Figure 43: South African Good Imports as (% of GDP), 2005-2014 
Figure 44: South African Goods Balance (% GDP), 2005-2012 
Figure 45: South African Service Imports (% GDP), 2005-2014 
Figure 46: South African Service Exports (% GDP), 2005-2014 
Figure 47: South African Foreign Direct Investments (BoP, current US$ billion), 2005-2014 
Figure 48: South African Net Foreign Direct Investments (% GDP), 2005-2014 
Figure 49: South African International Reserves, including gold (US$ billion), 2005-2012 
Figure 50: South African Market Capitalization of listed companies (% of GDP), 2005-2012 
Figure 51: South African Mining, Manufacturing, Utilities Output (US$ billion), 2005-2014

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