The Nigerian Defense Market Industry Opportunities and Entry Strategies, Analyses to 2017

Dec. 24, 2012 - PRLog -- Nigerian defense expenditure grew at a CAGR of 13.03% during the review period (2008-12), and is estimated to reach US$2.23 billion in 2013. Active participation in UN peacekeeping missions and operations to prevent the smuggling of stolen oil stimulated expenditure during the review period. These factors are expected to continue to drive defense expenditure throughout the forecast period (2013-2017), with spending anticipated to increase at a CAGR of 6.5%, to reach US$2.87 billion by 2017. As a percentage of GDP (gross domestic product), the country’s defense budget stood at 0.78% in 2011, and is expected to decrease to 0.75% of GDP by 2017.

Key opportunities for equipment suppliers are expected in areas such as offshore patrol vessels, and multi-purpose and utility helicopters and aircraft.
During the review period, 38.6% of the country’s total defense imports came from China and 18.1% from Italy. Nigeria imports defense equipment from China due to a trade co-operation agreement between the countries. Italy is also a key import partner of Nigeria, mainly due to the economic partnership agreement between the two countries. Aircraft, ships, and armored vehicles collectively accounted for 95% of the country’s total arms imports during the review period. During the forecast period, imports are anticipated to increase as the country plans to increase its defense expenditure, particularly for equipment purchases.

The country does not usually export any arms to foreign countries as its domestic defense industry is under-developed, but as an exception to this, Nigeria exported a few aircraft to the Democratic Republic of Congo in 2011. This trend is not expected to continue in the forecast period.

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Key Features and Benefits

The report provides detailed analysis of the current industry size and growth expectations from 2013 to 2017, including highlights of key growth stimulators, and also benchmarks the industry against key global markets and provides a detailed understanding of emerging opportunities in specific areas.

The report includes trend analysis of imports and exports, together with their implications and impact on the Nigerian defense industry.

The report covers five forces analysis to identify various power centers in the industry and how these are expected to develop in the future.

The report allows readers to identify possible ways to enter the market, together with detailed descriptions of how existing companies have entered the market, including key contracts, alliances, and strategic initiatives.

The report helps the reader to understand the competitive landscape of the defense industry in Nigeria. It provides an overview of key defense companies, both domestic and foreign, together with insights such as key alliances, strategic initiatives, and a brief financial analysis.

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Key Market Issues

According to the Corruption Perceptions Index 2010 of Transparency International, Nigeria is classified as a highly corrupt country. Corruption can result in unfair contract awards and has become a major obstacle for foreign companies aiming to supply arms to the Nigerian MoD. There is also widespread corruption in the Nigerian Police Force; embezzlement and mismanagement of the police budget has resulted in only a small portion of the budget being spent on protecting internal security, resulting in an increased internal threat to the country.

With a defense budget of US$2.2 billion in 2011, Nigeria invests only 0.78% of its GDP towards defense. During the review period an average of 16.5% of the defense budget was allocated for capital expenditure, representing a relatively low allocation for the purchase of equipment, and high-technology arms and ammunition. As a result, the country’s relatively small defense budget does not attract foreign defense companies, and the prohibition of FDI in the defense sector also acts as a barrier to market entry for foreign suppliers.