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Future of the Nigerian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018

Nigeria defence market: $4.4 billion industry by 2018


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2014-04-18 12:10:02 - Future of the Nigerian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018 - a new market research report on companiesandmarkets.com

The Nigerian defence market, valued at US$2.3 billion in 2013, is expected to see a double digit growth rate over the forecast period, to reach US$4.4 billion by 2018. Piracy, oil smuggling in the Gulf of Guinea and a contribution to peacekeeping operations are expected to drive the country´s military expenditure to register a growth rate of 13.62% over the forecast period. The growth in military expenditure will be assisted by the country´s stable economic growth over the forecast period, which will a see rise in defence expenditure as a percentage of GDP from 0.8% in 2013 to 1.1% in 2018.

Nigeria´s capital defence expenditure is expected to increase from 0.4 billion in 2013 to 0.6 billion by 2018, although its

 

 

share in total expenditure is expected to decrease from 15% during the review period to 14% over the forecast period. Defence equipment such as marine helicopters, fighters, patrol vessels, and armored personnel carriers are expected to be demand over the forecast period. An under developed domestic defence industry and availability of funds propel the Nigerian government to import from the countries producing low-cost defence equipment.

Nigeria is the largest crude oil producer in Africa and generates about 80% of its revenues from oil exports. However, the country is plagued by piracy and oil theft, so loses about 10% of its oil exports. The expanding activities of criminal gangs have caused an upsurge in the number of oil ships attacked by the Nigerian pirates in Gulf of Guinea in the last two years. Pirates not only hold the ship and crew for ransom, but also strip the vessel of oil and other valuable items. A lack of stringent security measures in Gulf of Guinea and along its borders has also accentuated the threat of oil theft, which cripples the country´s economy.

Nigeria´s defence imports peaked in 2010 due to the import of aircraft from China and fell back to 2009 levels during 2011. The sudden increase in imports in 2010 is primarily due to the import of 15 F-7 aircraft from China. During the forecast period, imports of defence equipment are expected to rise further as the country plans to increase its defence expenditure and spend more on equipment purchases. The underdeveloped domestic defence market will also lead to a rise in total defence equipment purchases during the forecast period.

The growing threat from Boko Haram and other extremist groups in northeastern states, and drug trafficking are expected to drive the Nigerian government´s investments in homeland security over the forecast period. Police modernization and homeland security infrastructure developments are expected to be primary areas for investment by the government.

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