Future of the Afghanistan Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022

Future of the Afghanistan Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022

Summary

The Future of Afghanistan Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022, 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 Afghanistan 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 -
- Afghanistan defense industry market size and drivers: detailed analysis of Afghanistan defense industry during 2018-2022, including highlights of the demand drivers and growth stimulators for the industry. It also provides a snapshot of the countrys 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
- Porters Five Force analysis of Afghanistan 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 countrys 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 Afghanistan defense industry. It provides an overview of key players, together with insights such as key alliances, strategic initiatives, and a brief financial analysis

Scope

- After the NATO-led International Security Assistance Force (ISAF) left the country in 2014, Afghan security forces were made responsible for protecting the country. Afghan defense expenditure decreased at a negative CAGR of -8.82% during the historic period from US$1.4 billion in 2013 to US$1 billion in 2017. Around 34% of the national budget was allocated to security expenditures in 2017, however, the negative CAGR was caused by a decrease in foreign aid which previously benefitted the security sector.
- expenditure allocation decreased from 21.6% in 2013 to 5.8% in 2017. 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 93.6% over the forecast period, higher than the average share of 86.8% during 2013-2017. 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 2018-2022.
- The MoD is expected to invest in multi-role light atack aircraft, attack helicopters, personnel weapon systyems for infantry and artillery systems.

Reasons to buy

- This report will give the user confidence to make the correct business decisions based on a detailed analysis of Afghanistan 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 Afghanistan defense industry covering sections including demand drivers, Porters Five Forces Analysis, Key Trends and Growth Stimulators, and latest industry contracts

1. Introduction 7
1.1. What is this Report About? 7
1.2. Definitions 7
1.3. Summary Methodology 9
1.4. About Strategic Defence Intelligence 10
2. Executive Summary 11
3. Market Attractiveness and Emerging Opportunities 12
3.1. Current Market Scenario 13
3.1.1. Primary threat perception 13
3.1.2. Military Doctrine and Strategy 15
3.1.3. Military Fleet Size 16
3.1.4. Procurement Programs 18
3.1.5. Social, Political and Economic Environment and Support for Defense Projects 19
3.1.6. Political and Strategic Alliances 20
3.2. Defense Market Size Historical and Forecast 22
3.2.1. Afghanistan defense expenditure is expected to grow at a CAGR of 1.69% over 2018-2022 22
3.2.2. US aid to Afghanistan is expected to decrease over the forecast period 24
3.2.3. The resurgence of the Taliban, the ongoing war against terrorism and capacity building of Afghan forces to fuel defense expenditure over the forecast period 26
3.2.4. Afghan defense expenditure as a percentage of GDP expected to decrease considerably over the forecast period 28
3.3. Analysis of Defense Budget Allocation 30
3.3.1. Share of capital expenditure is anticipated to increase over forecast period 30
3.3.2. Capital expenditure expected to increase at a CAGR of 4.53% over the forecast period 32
3.3.3. Afghanistan to spend US$5 billion cumulatively on revenue expenditure over the forecast period 34
3.3.4. Per capita defense expenditure anticipated to remain steady over the forecast period 36
3.4. Homeland Security Market Size and Forecast 38
3.4.1. Afghan homeland security budget to increase at a CAGR of 2.08% over the forecast period 38
3.4.2. Homeland security expenditure to be triggered by the countrys efforts to counter drug trade and human trafficking 40
3.4.3. Afghanistan is one of the most terror prone countries in the world 42
3.4.4. Afghanistan falls under worst affected terrorism category 43
3.4.5. Afghanistan has a terrorism index score of 9.4 45
3.5. Benchmarking against Key Global Markets 46
3.5.1. Afghanistan defense expenditure expected to grow significantly over forecast period 46
3.5.2. Afghanistans defense expenditure is low compared to other Asian countries 48
3.5.3. Afghanistan allocates a higher share of GDP for defense compared to other Asian Countries 49
3.6. Market Opportunities: Key Trends and Growth Stimulators 50
3.6.1. Aircraft 50
3.6.2. Attack helicopter 51
3.6.3. Modernization of the Afghanistan National Defense Security Force 52
4. Defense Procurement Market Dynamics 53
4.1. Import Market Dynamics 54
4.1.1. Afghanistan relies on defense imports from foreign countries 54
4.1.2. The US emerged as the largest suppliers of arms 55
4.1.3. Armored vehicles and aircraft dominate Afghan military imports 56
4.2. Export Market Dynamics 57
4.2.1. Afghanistans domestic defense manufacturing to be nil over the forecast period 57
5. Industry Dynamics 58
5.1. Five Forces Analysis 58
5.1.1. Bargaining power of supplier: Medium 59
5.1.2. Bargaining power of buyer: Medium 59
5.1.3. Barrier to entry: Low 59
5.1.4. Intensity of rivalry: Medium 59
5.1.5. Threat of substitution: High 59
6. Market Entry Strategy 60
6.1. Budget process 60
6.2. Procurement Policy and Process 61
6.3. Market Regulation 62
6.3.1. Afghanistan has not disclosed an FDI policy or investment regulations 62
6.3.2. Offset obligation not disclosed by the government 62
6.4. Market Entry Route 63
6.4.1. Equipment manufacturers can enter the market through government-to-government deals 63
6.5. Key Challenges 64
6.5.1. Corruption and malpractices 64
6.5.2. Lack of skilled labor 64
6.5.3. Limited defense budget 64
7. Competitive Landscape and Strategic Insights 65
7.1. Competitive Landscape Overview 65
7.2. Key Companies 66
7.2.1. General Dynamics: Overview 66
7.2.2. General Dynamics: Products 66
7.2.3. General Dynamics: Recent contract wins 67
7.2.4. Sierra Nevada Corporation: Overview 68
7.2.5. Sierra Nevada Corporation: Products 68
7.2.6. Sierra Nevada Corporation: Recent announcements and strategic initiatives 68
7.2.7. Sierra Nevada Corporation: Alliances 69
7.2.8. Sierra Nevada Corporation: Recent contract wins 69
7.2.9. Lockheed Martin Corp.: Overview 70
7.2.10. Lockheed Martin Corp.: Products and services 70
7.2.11. Lockheed Martin Corp.: Recent announcements and strategic initiatives 70
7.2.12. Lockheed Martin Corp.: Recent contract wins 71
7.2.13. MD Helicopters: Overview 72
7.2.14. MD Helicopters: Products and services 72
7.2.15. MD Helicopters: Recent announcements and strategic initiatives 72
7.2.16. MD Helicopters: Recent contract wins 73
8. Business Environment and Country Risk 74
8.1. Economic Performance 74
8.1.1. GDP Per Capita 74
8.1.2. GDP, Current Prices 75
8.1.3. Local Currency Unit per US Dollar 76
8.1.4. Exports of Goods and Services (LCU) 77
8.1.5. Imports of Goods and Services (LCU) 78
8.1.6. Goods Exports as a percentage of GDP 79
8.1.7. Goods Imports as a percentage of GDP 80
8.1.8. Service Imports as a percentage of GDP 81
8.1.9. Service Exports as a percentage of GDP 82
8.1.10. Government Cash Surplus/Deficit as a percentage of GDP 83
8.1.11. Net Foreign direct investment 84
8.1.12. Net foreign direct investment as a percentage of GDP 85
8.1.13. Mining, Manufacturing, Utilities Output 86
9. Appendix 87
9.1. About SDI 87
9.2. Disclaimer 87

List Of Tables

Table 1: Afghanistan National Army (ANA) Strength 16
Table 2: Afghanistan Air Force (AAF) Strength 16
Table 3: Afghanistan Ongoing Procurement Programs 18
Table 4: Afghanistan Future Procurement Programs 18
Table 5: Afghanistan Defense Expenditure (AFN billion & US$ billion), 2013-2022 22
Table 6: US aid to Afghanistan (US$ Billion), 2013-2022 24
Table 7: Afghanistan GDP Growth vs. Defense Expenditure as a percentage of GDP, 2013-2022 28
Table 8: Afghanistan Defense Budget Split Between Capital and Revenue Expenditure (%), 2013-2022 30
Table 9: Afghanistan Defense Capital Expenditure (AFN Billion and US$ Million), 2013-2022 32
Table 10: Afghanistan Defense Revenue Expenditure (AFN Billion and US$ Million), 2013-2022 34
Table 11: Afghanistan Per-Capita Defense Expenditure (US$), 2013-2022 36
Table 12: Afghanistan Defense Homeland Security expenditure (AFN Billion and US$ Million), 2013-2022 38
Table 13: Terrorism Index, 2017 43
Table 14: Benchmarking against Key Markets - 2013-2017 vs. 2018-2022 46
Table 15: Aircraft Procurement Contracts 50
Table 16: Attack Helicopter Procurement Contracts 51
Table 17: Afghanistan Budget Preparation Process 60
Table 18: Competitive Landscape of the Afghan Defense Market 65
Table 19: General Dynamics - Product focus 66
Table 20: General Dynamics - Recent Contract Wins 67
Table 21: Sierra Nevada Corporation - Product focus 68
Table 22: Sierra Nevada Corporation - Alliances 69
Table 23: Sierra Nevada Corporation - Recent Contract Wins 69
Table 24: Lockheed Martin Corp. - Product focus 70
Table 25: Lockheed Martin Corp. - Recent Contract Wins 71
Table 26: MD Helicopters - Product focus 72
Table 27: MD Helicopters - Recent Contract Wins 73

List Of Figures

Figure 1: Afghanistan Defense Expenditure (AFN Billion), 2013-2022 23
Figure 2: Afghanistan Defense Expenditure (US$ Billion), 2013-2022 23
Figure 3: US Aid to Afghanistan (US$ Billion), 2013-2022 25
Figure 4: Afghanistan GDP Growth vs. Defense Expenditure as Percentage of GDP, 2013-2022 29
Figure 5: Afghanistan Budget Split Between Capital and Revenue Expenditure (%), 2013-2022 31
Figure 6: Afghanistan Defense Capital Expenditure (AFN Billion), 2013-2022 33
Figure 7: Afghanistan Defense Capital Expenditure (US$ Million), 2013-2022 33
Figure 8: Afghanistan Defense Revenue Expenditure (AFN Billion), 2013-2022 35
Figure 9: Afghanistan Defense Revenue Expenditure (US$ Million), 2013-2022 35
Figure 10: Afghanistan Per-Capita Expenditure (US$), 2013-2022 37
Figure 11: Afghanistan Defense Homeland Security Expenditure (AFN Billion), 2013-2022 39
Figure 12: Afghanistan Defense Homeland Security Expenditure (US$ Million), 2013-2022 39
Figure 13: Terrorism Heat Map, 2017 42
Figure 14: Terrorism Index, 2017 45
Figure 15: Benchmarking with Key Markets - 2013-2017 vs. 2018-2022 47
Figure 16: Defense Expenditure of the Worlds Largest Military Spenders (US$ Billion), 2017 and 2022 48
Figure 17: Defense Expenditure as a percentage of GDP of Largest Military Spenders (%), 2017 49
Figure 18: Afghanistan Defense Imports (US$ Million), 2012-2016 54
Figure 19: Afghanistan Defense Imports by Country (%), 2012-2016 55
Figure 20: Afghanistan Defense Imports by Weapon Category (%), 2012-2016 56
Figure 21: Industry Dynamics Porters Five Forces Analysis 58
Figure 22: Afghanistan GDP Per Capita, 2015-2025 74
Figure 23: Afghanistan GDP, Current Prices (In US$ Billion), 2015-2025 75
Figure 24: Local Currency Unit per US$ - Exchange Rate, 2015-2024 76
Figure 25: Afghanistan Exports of Goods and Services (In LCU Billion), 2005-2014 77
Figure 26: Afghanistan Imports of Goods and Services (In LCU Billion), 2005-2014 78
Figure 27: Afghanistan Goods Exports as a percentage of GDP, 2008-2013 79
Figure 28: Afghanistan Goods Imports as a percentage of GDP, 2008-2013 80
Figure 29: Afghanistan Service Imports as a percentage of GDP, 2008-2013 81
Figure 30: Afghanistan Service exports as a percentage of GDP, 2008-2013 82
Figure 31: Government Cash Surplus/Deficit as a percentage of GDP,2008-2012 83
Figure 32: Afghanistan Foreign Direct Investment, Net (current US$ Billion), 2008-2013 84
Figure 33: Afghanistan Net foreign direct investment as a percentage of GDP, 2008-2013 85
Figure 34: Afghanistan Mining, Manufacturing, Utilities Output (US$ Billion), 2005-2014 86

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