Market Trends of Middle East and Africa Defense Industry
This section covers the major market trends shaping the MEA Defense Market according to our research experts:
The Vehicles Segment to Experience the Highest Growth During the Forecast Period
The vehicles segment of the market is expected to register the highest CAGR during the forecast period. This growth is mainly expected to be due to the current plans of the countries in Middle-East and Africa to modernize their armed forces and upgrade their air, land, and sea capabilities. For instance, in July 2022, The Armed Forces of the Kingdom of Morocco have received the VL MICA anti-aircraft system and several Sherpa armoured vehicles from France. The system consists of a command centre, a radar and three to six vertical launchers mounted on trucks, and requires a logistical support vehicle. The system is capable to operate in all weather conditions and, according and can be equipped with both a heat-seeking head and an active radar head.
Countries, like the United Arab Emirates, Qatar, Turkey, and Saudi Arabia, are currently majorly focusing on developing their military capabilities. Saudi Arabia ranked as the sixth-largest defense spender in the world in 2021, behind the United States, China, India, Russia, and the United Kingdom. In February 2021, the governor of GAMI announced that the Saudi Arabia Government (SAG) is looking forward to investing USD 20 billion in its military industry for the next decade. Out of the investment, half of this amount shall be dedicated to the general defense industry, and the rest half to be invested in research and development (R&D). Furthermore, the country plans to increase its military R&D spending from 0.2% to approx. Around 4% of its armament's expenditure by late 2030. Such developments by countries in the region are anticipated to drive the growth of the market during the forecast period.
Saudi Arabia Currently Holds the Highest Market Share
Saudi Arabia is among the top five largest military spenders and the largest spender in the Middle-East and Africa region, with USD 55.6 billion spending in 2021. The country decreased its spending by approximately ~17% in comparison to 2020. With the largest military budget, the country emerged as the largest importer of arms majorly from the United States, followed by the United Kingdom and France. The country is getting into partnerships and collaborations in order to significantly reduce the defense import of the country. In 2021, Saudi Arabia's General Authority for Military Industries (GAMI) and the UAE Tawazun Economic Council signed a memorandum of understanding (MoU) during the International Defense Exhibition and Conference (IDEX 2021). The MoU aims to build strategic relations of cooperation, partnership, and integration between the two sides to enhance the capabilities of the defense industries sector, explore potentials for joint projects, and identify areas of cooperation in defense R&D. The MoU complements the ongoing cooperation between Saudi Arabia and the United Arab Emirates in military and defense fields. This comes on the heels of similar agreements and MoUs signed between the two countries to deepen cooperation in the military and defense industries. In March 2022, the Saudi MoD announced five deals with the Saudi Arabian Military Industries (SAMI) on the final day of the inaugural World Defense Show (WDS) 2022 in Riyadh. Two of them were closed with the Royal Saudi Land Forces (RSLF) and three with the Royal Saudi Naval Forces (RSNF). The deals include one SAR 6 billion (USD 1.6 billion) deal with SAMI for providing advanced communication and maritime systems, among others., a SAR1 billion (USD 270 million) contract with Military Industries Corporation to acquire defense systems, technical and logistic support, and training for the Royal Saudi Air Forces (RSAF), and four contracts worth SAR 100 million (USD 27 million) with the National Company for Mechanical Systems (NCMS) to provide EO systems for the RSLF, among others. Saudi Arabia leaned to develop and manufacture more weapons and military systems domestically, aiming to spend 50% of the military budget locally by 2030. It plans to invest more than USD 20 billion in its domestic military industry over the next decade as part of aggressive plans to boost local military spending. The country also plans to increase its military R&D spending from 0.2% to around 4% of its expenditure by 2030.
