South Africa Defence & Security Report 2016

Jun 10, 2016 - Business Monitor International - 53 pages - USD $1,295
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South Africa's defence budget will remain limited in the medium term, ami d difficult economic conditions and as the government focuses spending on much-needed service delivery improvements rather than military development. Over the longer term, as the economy improves, defence spending will register gradual growth amid rising regional terrorist threats and domestic risks linked to crime and social unrest, necessitating investment into maintaining and improving the SANDF's capabilities. We expect exports from the well-developed South African defence industry to grow steadily over the next decade, as foreign engagement with local companies strengthens.

Recent Developments:

For FY2016/17, the government has allocated ZAR47bn (USD3bn) for defence. A significant share of the defence budget will be directed towards border safeguarding, peacekeeping missions, the African Capacity for Immediate Response to Crises (ACIRC) and maritime operations, as well as Operation Thusano, under which the South African National Defence Force (SANDF)'s armoured vehicles are being maintained and upgraded. This will leave limited funding available for new procurement.

South Africa's Paramount Group unveiled its new Mbombe 8 ICV at the Kazakhstan Defence Expo in early-June 2016.

In May 2016, Paramount announced the formal launch of a military/weaponised version of the Advanced High-Performance Reconnaissance Light Aircraft (AHRLAC) - the Mwari. Boeing is developing an integrated mission system for the aircraft and has agreed to promote the AHRLAC on the global market.

In January 2016, Denel Group's Mechem announced it had developed a new armoured and mine-protected recovery vehicle based on its Casspir NG armoured personnel carrier.

Denel Dynamics reported completion of its flight test programme for the Seeker 400 UAV system in August 2015.

Denel Land Systems' Badger IFV reached the stage of 'Product Baseline One' in February 2016.

The National Defence Industry Council was launched in March 2016, tasked with strengthening coherence in the local defence sector and improving long-term alignment between SANDF requirements and development of domestic defence industrial capabilities.

In November 2015, Denel entered a deal with Honeywell for collaboration on retrofit, modernisation and upgrades of avionics, communications and mechanical subsystems in the Sub-Saharan Africa region.

In October 2015, Paramount entered an agreement with Spanish Navantia to collaborate on development of naval vessels and systems. In September 2015, Paramount signed a deal with UK's Griffon Hoverwork for cooperation on production, maintenance and marketing of hovercraft.

In March 2016, Saab Grintek was awarded a contract by Armscor for the delivery of a Tacticall Integrated Communications System to the South African Navy.

Also in March, the South Africa Air Force confirmed the reactivation of its UAV capability - the 10 Squadron.

The defence department is currently considering tenders for the navy's offshore/inshore patrol vessel requirement. The navy is also looking to purchase a hydrographic vessel and an unmanned aerial system for maritime surveillance. It reportedly trialled the Austrian Schiebels Camcopter S-100 in October 2015.

South Africa plans mid-life upgrades of its four MEKO A-200 Valour-class frigates over a 10-year period starting in 2017-2018.

The government announced in February 2016, that its military personnel would be withdrawn from the UNAMID mission in Darfur, citing issues with logistics support and budget reductions.

In early June 2016, the US State Department warned it had received information that Islamic State-linked groups were planning attacks within South Africa in the near term.

Defence Industry Risk Reward Index

South Africa possesses the largest defence sector in Africa, and domestic companies export a range of military products to countries across the world. Relatively high levels of economic and investment openness facilitate market entry for foreign firms, and Pretoria's wide variety of defence collaboration agreements and strategic international alliances offer substantial trade opportunities. That said, while elevated risks of crime and social instability - in addition to participation in regional missions - continue to drive domestic demand for military equipment, the country's overall defence expenditure remains limited. As a result, South Africa performs slightly better for Risks than for Rewards in our Index. South Africa's aggregate score in the Risk/Reward Index stands at 58 out of 100, ranking it eighth in the Middle East and Africa region.

The South Africa Defence & Security Report features BMI Research's independent forecasts for national and international security, the defence industry, military expenditure, employment in arms production, and arms imports and exports, as well as examining industry trends and prospects, national and multinational arms producers and the regulatory environment.

BMI'sSouth Africa Defence & Security Report provides professionals, consultancies, government departments, regulatory bodies and researchers with independent forecasts and regional competitive intelligence on the South African defence and security industry.

Key Benefits
Benchmark BMI's independent defence and security industry forecasts on South Africa to test other views - a key input for successful budgetary and strategic business planning in the South African defence and security market.
Target business opportunities and risks in the Asia defence and security sector through reviews of latest industry trends, regulatory changes and major deals, projects and investments in Asia.
Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity).

Coverage

Global and Regional Political Outlooks

A strategic overview of the world’s major political risks, identifying countries facing leadership successions and nations at risk of upheaval, inter-state conflict, or separatism and insurgencies, plus a summary of the world’s ‘wild card’ low-probability high-impact risks.

SWOT Analysis

Snapshot evaluation of the major issues affecting the defence and security sectors, economy and politics, with issues subdivided into strengths, weaknesses, opportunities and threats.

BMI Industry Forecast Scenario


Historic data series and forecasts to end-2019 for key industry indicators supported by explicit assumptions, plus analysis of key downside risks to the main forecast.
Defence Expenditure: Defence expenditure (local currency and USDbn); defence expenditure (% of total budget); defence expenditure per capita (USD); defence budget (local currency and USDbn).
Armed Forces (to 2012): Manpower available for military service, manpower fit for militaryservice, army personnel, navy personnel,air force personnel, total armed forces, (‘000) (% population).
Arms Trade: Arms and ammunition exports and imports (USDmn); bombs, grenades and missiles exports and imports (USDmn); revolver and pistol exports and imports (USDmn); weapons excluding guns and swords exports and imports (USDmn).

Political Risk Assessment

Drawing on BMI’s heritage of more than 25 years of Country Risk analysis, this comprehensively evaluates the key risks to domestic politics and foreign relations, focusing on issues most likely to affect either domestic security or the defence sector.

Security Risk Analysis

BMI’s proprietary Security Risk Indices provide investors with a reliable and country-comparable guide to conflict, terrorism and criminal risk, backed up by our analyst’s latest assessment of each component. Furthermore, drawing on our Country Risk expertise, we assess the state’s vulnerability to a serious, or prolonged, terrorist campaign.

Armed Forces Spending/ Expenditure

The reports contain a detailed breakdown of areas of expenditure by the armed forces, these include spending on international deployments, WMDs and missile defence systems as well as individual breakdowns of the cost-per-soldier.

Competitive Landscape

The domestic security overview lists the various potential internal security threats facing a country, ranging from internal security issues such as terrorism, cyber terrorism, crime and drugs, to external security issues including general defence procedures and potential threats from specific countries. The reports also provide a regional overview which details specific issues and flashpoints affecting the Americas, along with potential risks in the coming year.

Company Profiles*

Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.

Sources

The Defence & Security Market reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.

*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.

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BMI Research offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities. Through 'Total Analysis,' their unique, reflexive approach linking macroeconomic, industry and financial market analysis, they help clients gain unparalleled insight across 24 industries and 200 global markets.