Future of the Libyan Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to 2022

Table of Contents

1. Introduction 7

1.1. What is this Report About? 7

1.2. Definitions 7

1.3. Summary Methodology 9

1.4. About Strategic Defense Intelligence 11

2. Executive Summary 12

3. Market Attractiveness and Emerging Opportunities 14

3.1. Current Market Scenario 15

3.1.1. Primary threat perception 15

3.1.2. Military Doctrine & Strategy 16

3.1.3. Military Fleet Size 17

3.1.4. Procurement Programs 20

3.1.5. Ongoing procurement programs 20

3.1.6. Future procurement programs 21

3.1.7. Social, Political and Economic Environment & Support for Defense Projects 22

3.1.8. Political & Strategic Alliances 23

3.1.9. Libyan defense budget anticipated to grow at a CAGR of

4.88% during 2018-2022 25

3.1.10. Rebuilding of the armed forces and replacing aging military equipment are the major factors driving Libyan defense expenditure 27

3.2. Analysis of Defense Budget Allocation 29

3.2.1. The majority of Libya’s defense budget is allocated for revenue expenditure 29

3.2.2. Capital expenditure expected to increase at a CAGR of

5.60% over 2018-2022 31

3.2.3. Defense expenditure as a percentage of GDP to increase during the forecast period 33

3.2.4. Per capita defense expenditure set to increase over the forecast period 35

3.3. Homeland Security Market Size and Forecast 36

3.3.1. Political stalemate and increased terrorism, border security, and internal disputes form the main components of homeland security expenditure 36

3.3.2. Libya considered as highly effected country due to terror activities 38

3.3.3. Libya faces high level of threat from foreign terrorist organizations 39

3.3.4. Libya faces significant threat from terrorists 41

3.4. Benchmarking with Key Global Markets 42

3.4.1. Libyan defense budget expected to register growth over the period 2016-2020 42

3.4.2. Libyan defense expenditure is small compared to the leading spenders 44

3.4.3. Libya spent 5% of its GDP on defense in 2017 45

3.5. Market Opportunities: Key Trends and Drivers 46

3.5.1. Transport Helicopters 46

3.5.2. Personnel Weapons 47

3.5.3. Soft Armor 48

4. Defense Procurement Market Dynamics 49

4.1. Import Market Dynamics 50

4.1.1. Defense imports are expected to increase during the forecast period 50

4.1.2. Russia was the leading supplier of arms to Libya during 2012-2016 51

4.1.3. Missiles constitute the majority of Libyan arms imports 52

4.2. Export Market Dynamics 53

4.2.1. Libyan defense exports market is negligible 53

5. Industry Dynamics 54

5.1. Five Forces Analysis 54

5.1.1. Bargaining power of supplier: medium to low 55

5.1.2. Bargaining power of buyer: medium 55

5.1.3. Barrier to entry: medium 55

5.1.4. Intensity of rivalry: medium 55

5.1.5. Threat of substitution: low to medium 55

6. Market Entry Strategy 56

6.1. Market Regulation 56

6.1.1. Arms Embargo in Libya 56

6.1.2. Libya has not disclosed any offset policy 56

6.2. Market Entry Route 57

6.2.1. Budgeting Process 57

6.2.2. Procurement Policy & Process 58

6.2.3. Foreign Military Sale (FMS) is the preferred entry route 59

6.3. Key Challenges 60

6.3.1. Underdeveloped domestic industry and internal instability discourages foreign participation 60

6.3.2. Unemployment and scarcity of skilled labor 60

7. Competitive Landscape and Strategic Insights 61

7.1. Competitive Landscape Overview 61

7.2. Key Foreign Companies 62

7.2.1. Lockheed Martin: overview 62

7.2.2. Lockheed Martin: products and services 62

7.2.3. Lockheed Martin: recent announcements and strategic initiatives 62

7.2.4. Lockheed Martin: alliances 64

7.2.5. Lockheed Martin: recent contract wins 64

7.2.6. Finmeccanica: overview 65

7.2.7. Finmeccanica: products and services 65

7.2.8. Finmeccanica: recent announcements and strategic initiatives 66

7.2.9. Finmeccanica: alliances 67

7.2.10. Finmeccanica: recent contract wins 68

7.2.11. KBP Instrument Design Bureau – overview 69

7.2.12. KBP Instrument Design Bureau – major products and services 69

7.2.13. KBP Instrument Design Bureau – recent announcements and strategic initiatives 70

7.2.14. KBP Instrument Design Bureau – recent contract wins 71

8. Business Environment and Country Risk 72

8.1. Economic Performance 72

8.1.1. GDP per capita at constant prices 72

8.1.2. GDP at current prices (US$ Billion) 73

8.1.3. Exports of Goods and Services (LCU bn) 74

8.1.4. Imports of Goods and Services (LCU Bn) 75

8.1.5. LCU per US$ (period average) 76

8.1.6. Goods exports as a percentage of GDP 77

8.1.7. Goods imports as a percentage of GDP 78

8.1.8. Services Imports as a percentage of GDP 79

8.1.9. Service Exports as a percentage of GDP 80

8.1.10. Foreign direct investment, net (BoP, current US$ billions) 81

8.1.11. Foreign direct investment, as Percentage of GDP 82

8.1.12. Mining, Manufacturing, Utilities Output (US$ billion) 83

9. Appendix 84

9.1. About SDI 84

9.2. Disclaimer 84

List of Tables

Table 1: Army Equipment in Libya 17

Table 2: Libyan Navy Strength 18

Table 3: Aircrafts in Libya 19

Table 4: Libya – Ongoing Procurement Programs 20

Table 5: Libya – Future Procurement Programs 21

Table 6: Libyan Defense Expenditure (LYD Billion and US$ Billion), 2013-2022 25

Table 7: Libyan Defense Budget Split Between Capital and Revenue Expenditure (%), 2013-2022 29

Table 8: Libyan – Defense Capital Expenditure (LYD Billion and US$ Billion), 2013-2022 31

Table 9: Libyan – GDP Growth vs Defense Expenditure as a Percentage of GDP, 2013-2022 33

Table 10: Libyan per capita defense expenditure (US$), 2013-2022 35

Table 11: Terrorism Index, 2017 39

Table 12: Benchmarking with Key Markets, 2013-2017 vs. 2018-2022 42

Table 13: Libyan Budget Formation Timetable: 57

Table 17: Competitive Landscape of the Libyan Defense Industry 61

Table 14: Lockheed Martin – product focus 62

Table 15: Lockheed Martin – Alliances 64

Table 16: Lockheed Martin – Recent Contract Wins 64

Table 17: Finmeccanica – Product Focus 65

Table 18: Finmeccanica – Alliances 67

Table 19: Finmeccanica- Recent Contract Wins 68

Table 20: KBP Instrument Design Bureau – Major Products & Services 69

Table 21: KBP Instrument Design Bureau – recent contract wins 71

List of Figures

Figure 1: Libyan Defense Expenditure (LYD Billion), 2013-2022 26

Figure 2: Libyan Defense Expenditure (US$ Billion), 2013-2022 26

Figure 3: Libyan Defense Budget Split Between Capital and Revenue Expenditure (%), 2013-2022 30

Figure 4: Libyan – Defense Capital Expenditure (LYD Million), 2013-2022 32

Figure 5: Libyan – Defense Capital Expenditure (US$ Million), 2013-2022 32

Figure 6: Libyan GDP Growth vs. Defense Expenditure as Percentage of GDP, 2013-2022 34

Figure 7: Libyan per capita defense expenditure (US$), 2013-2022 35

Figure 8: Terrorism Heat Map, 2017 38

Figure 9: Terrorism Index, 2017 41

Figure 10: Benchmarking with Key Markets, 2013-2017 vs. 2018-2022 43

Figure 11: Benchmarking with World’s Largest Defense Spenders (US$ Billion), 2017 and 2022 44

Figure 12: Benchmarking with Large Defense Spenders as % of GDP – 2017 45

Figure 13: Transport Helicopter Market (US$ Million), 2017-2027 46

Figure 14: Personal Weapons Market (US$ Million), 2017-2027 47

Figure 15: Soft Armor Market (US$ Million), 2017-2027 48

Figure 16: Libyan Defense Imports (US$ million), 2012-2016 50

Figure 17: Libyan Defense Imports by Country (%), 2012-2016 51

Figure 18: Libyan Defense Imports by Category, 2012-2016 52

Figure 19: Industry Dynamics – Porter’s Five Forces Analysis 54

Figure 20: Libyan GDP Per Capita at Constant Prices (US$), 2015-2025 72

Figure 21: Libyan GDP at Current Prices (US$ Billion), 2015-2025 73

Figure 22: Libyan Exports of Goods and Services (LCU Billion), 2005-2014 74

Figure 23: Libyan Imports of Goods and Services (LCU Bn), 2005-2014 75

Figure 24: Libya- LCU per US$ (period average), 2015-2024 76

Figure 25: Libya- Goods exports as a % of GDP (%), 2005-2013 77

Figure 26: Libya- Goods imports as a % of GDP (%), 2005-2013 78

Figure 27: Libyan Services Imports as a % of GDP (%), 2005-2013 79

Figure 28: Libyan Service Exports as a % of GDP (%), 2005-2013 80

Figure 29: Libya- Foreign direct investment, net (BoP, current US$ billion), 2005-2013 81

Figure 30: Libya- Foreign direct investment, % GDP, 2005-2013 82

Figure 31: Libyan Mining, Manufacturing, Utilities Output (LCU billion), 2005-2014 83