Africa, Middle East defense market worth $45.5B in 2021

May 28, 2013 at 12:57 PM
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LONDON, May 28 (UPI) -- A study by market analysis firm Frost and Sullivan projects the Middle East and African defense markets will be worth $45.49 billion in 2021.

The revenue growth, from $29.67 billion in 2012, will be driven by military modernization programs as a result of civil unrest and international instability, the study said.

"Political resolve to maintain up-to-date systems drive opportunities in support services and upgrades, especially in long-range strike capabilities and air platforms," said Frost and Sullivan Aerospace and Defense Research Analyst Yasha Izadpanah.

"Highest growth is expected in the command, control, communications, computers, intelligence, surveillance and reconnaissance and support in service segments, with compound annual growth rates of 4.5 percent and 6.7 percent, respectively, between 2012 and 2021."

The study is called "The Middle East and Africa Defense Market Assessment.

But despite projected growth the market does contain speed bumps for defense contractors, it said.

"While the successful acquisition of these contracts may depend on the ratification of offset agreements, defense companies are finding it difficult to fully implement offset conditions, curbing market growth in the Middle East and Africa.

"The market is further restrained by arms regulations in Western countries, which limit the licensing of military technology to the regions. This restriction compels procurement agencies to seek contracts in countries such as Russia or China that employ less stringent controls. "

The study noted that with many of the countries in the Middle East and Africa relationship but collaboration with domestic companies "to create sophisticated local solutions" that plug into high-end capabilities" is also crucial.

"Defense suppliers must also establish a presence in smaller countries where procurement opportunities for modest budgets are available," said Izadpanah. "Return-on-investments may be limited in the short term, but demand in countries like Morocco, Kuwait and South Africa is likely to increase rapidly in the long term."

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