Future of the Libyan Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to 2023

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. Social, Political and Economic Environment & Support for Defense Projects 21

3.1.6. Political and Strategic Alliances 22

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

1.56% during 2019-2023 24

3.1.8. Rebuilding the armed forces and replacing aging equipment 26

3.2. Analysis of Defense Budget Allocation 27

3.2.1. The majority of Libya’s defense budget is allocated to revenue expenditure 27

3.2.2. Capital expenditure set to rise at a forecast-period CAGR of

1.41% 29

3.2.3. Defense expenditure as a percentage of GDP to rise over the forecast period 31

3.2.4. Per capita defense expenditure set to increase over the forecast period 32

3.3. Homeland Security Market Size and Forecast 33

3.3.1. Political stalemate, terrorism, border security, and internal disputes 33

3.3.2. Libya considered to be highly effected by terrorism 35

3.3.3. Libya faces high level of threat from foreign terrorist organizations 36

3.3.4. Libya faces significant threat from terrorists 38

3.4. Benchmarking with Key Global Markets 39

3.4.1. Libyan defense budget anticipated to register growth over the period 2019-2023 39

3.4.2. Libyan defense expenditure is small compared to the leading spenders 41

3.4.3. Libya spent 4% of its GDP on defense in 2018 42

3.5. Market Opportunities: Key Trends and Drivers 43

3.5.1. Top 10 Defense market sectors by value (US$ Million) – Projections over period 2018-2023 43

3.5.2. Transport Helicopters 44

3.5.3. Personnel Weapons 45

3.5.4. Soft Armor 46

4. Defense Procurement Market Dynamics 47

4.1. Import Market Dynamics 48

4.1.1. Defense imports are expected to increase during the forecast period 48

4.1.2. Russia was the leading supplier of arms to Libya during 2012-2016 49

4.1.3. Armored vehicles to compromise the majority of Libyan arms imports 50

4.2. Export Market Dynamics 51

4.2.1. Libyan defense exports market is negligible 51

5. Industry Dynamics 52

5.1. Five Forces Analysis 52

5.1.1. Bargaining power of supplier: high 53

5.1.2. Bargaining power of buyer: low 53

5.1.3. Barrier to entry: medium 53

5.1.4. Intensity of rivalry: low 53

5.1.5. Threat of substitution: low to medium 53

6. Market Entry Strategy 54

6.1. Market Regulation 54

6.1.1. Arms Embargo in Libya 54

6.1.2. Libya has not disclosed any offset policy 54

6.2. Market Entry Route 55

6.2.1. Budgeting Process 55

6.2.2. Procurement Policy & Process 56

6.2.3. Foreign Military Sale (FMS) is the preferred entry route 57

6.3. Key Challenges 58

6.3.1. Underdeveloped industry and internal instability discouraging foreign participation 58

6.3.2. Unemployment and scarcity of skilled labor 58

7. Competitive Landscape and Strategic Insights 59

7.1. Competitive Landscape Overview 59

7.2. Key Foreign Companies 60

7.2.1. Lockheed Martin: overview 60

7.2.2. Lockheed Martin: products and services 60

7.2.3. Lockheed Martin: recent announcements and strategic initiatives 60

7.2.4. Lockheed Martin: alliances 62

7.2.5. Lockheed Martin: recent contract wins 62

7.2.6. Lockheed Martin Corp.: financial analysis 63

7.2.7. Leonardo S.p.A: overview 65

7.2.8. Leonardo S.p.A: products and services 65

7.2.9. Leonardo S.p.A: recent announcements and strategic initiatives 66

7.2.10. Leonardo S.p.A: alliances 68

7.2.11. Leonardo S.p.A: recent contract wins 70

7.2.12. KBP Instrument Design Bureau – overview 72

7.2.13. KBP Instrument Design Bureau – major products and services 72

7.2.14. KBP Instrument Design Bureau – recent announcements and strategic initiatives 73

7.2.15. KBP Instrument Design Bureau – recent contract wins 75

8. Business Environment and Country Risk 76

8.1. Economic Performance 76

8.1.1. GDP per capita at constant prices 76

8.1.2. GDP at current prices (US$ Billion) 77

8.1.3. Exports of Goods and Services (LCU bn) 78

8.1.4. Imports of Goods and Services (LCU Billion) 79

8.1.5. LCU per US$ (period average) 80

8.1.6. Goods exports as a percentage of GDP 81

8.1.7. Goods imports as a percentage of GDP 82

8.1.8. Services Imports as a percentage of GDP 83

8.1.9. Service Exports as a percentage of GDP 84

8.1.10. Foreign direct investment, net (BoP, current US$ billions) 85

8.1.11. Foreign direct investment, as Percentage of GDP 86

8.1.12. Mining, Manufacturing, Utilities Output (US$ billion) 87

9. Appendix 88

9.1. About SDI 88

9.2. Disclaimer 88

List of Tables

Table 1: Libyan Army Strength 17

Table 2: Libyan Navy Strength 18

Table 3: Libyan Air Force Strength 19

Table 4: Top Libyan Defense Procurement Programs by Value (US$ Million) 2018-2023 20

Table 5: Libyan Defense Expenditure (LYD Billion and US$ Billion), 2014-2023 24

Table 6: Libyan Defense Budget Split Between Capital and Revenue Expenditure (%), 2014-2023 27

Table 7: Libyan – Defense Capital Expenditure (LYD Billion and US$ Billion), 2014-2023 29

Table 8: Libyan – GDP Growth vs Defense Expenditure as a Percentage of GDP, 2014-2023 31

Table 9: Libyan per capita defense expenditure (US$), 2014-2023 32

Table 10: Terrorism Index, 2018 36

Table 11: Benchmarking with Key Markets, 2014-2018 vs. 2019-2023 39

Table 12: Top 10 Libyan Defense Market Sectors by Value (US$ Million) – 2018-2023 43

Table 13: Libyan Budget Formation Timetable: 55

Table 14: Competitive Landscape of the Libyan Defense Industry 59

Table 15: Lockheed Martin – product focus 60

Table 16: Lockheed Martin – Alliances 62

Table 17: Lockheed Martin – Recent Contract Wins 62

Table 18: Leonardo S.p.A – Product Focus 65

Table 19: Leonardo S.p.A – Alliances 68

Table 20: Leonardo S.p.A – Recent Contract Wins 70

Table 21: KBP Instrument Design Bureau – Major Products and Services 72

Table 22: KBP Instrument Design Bureau – recent contract wins 75

List of Figures

Figure 1: Libyan Defense Expenditure (LYD Billion), 2014-2023 25

Figure 2: Libyan Defense Expenditure (US$ Billion), 2014-2023 25

Figure 3: Libyan Defense Budget Split Between Capital and Revenue Expenditure (%), 2014-2023 28

Figure 4: Libyan – Defense Capital Expenditure (LYD Million), 2014-2023 30

Figure 5: Libyan – Defense Capital Expenditure (US$ Million), 2014-2023 30

Figure 6: Libyan GDP Growth vs. Defense Expenditure as Percentage of GDP, 2014-2023 31

Figure 7: Libyan per capita defense expenditure (US$), 2014-2023 32

Figure 8: Terrorism Heat Map, 2018 35

Figure 9: Terrorism Index, 2018 38

Figure 10: Benchmarking with Key Markets, 2014-2018 vs. 2019-2023 40

Figure 11: Benchmarking with World’s Largest Defense Spenders (US$ Billion), 2018 and 2023 41

Figure 12: Benchmarking with Large Defense Spenders as % of GDP – 2018 42

Figure 13: Transport Helicopter Market (US$ Million), 2018-2023 44

Figure 14: Personal Weapons Market (US$ Million), 2018-2023 45

Figure 15: Soft Armor Market (US$ Million), 2018-2023 46

Figure 16: Libyan Defense Imports (US$ Million), 2012-2016 48

Figure 17: Libyan Defense Imports by Country (%), 2012-2016 49

Figure 18: Libyan Defense Imports by Category, 2012-2016 50

Figure 19: Industry Dynamics – Porter’s Five Forces Analysis 52

Figure 20: Lockheed Martin Corp. – Revenue Trend Analysis (US$ Billion), 2012-2016 63

Figure 21: Lockheed Martin Corp. – Operating Profit Trend Analysis (US$ Billion), 2012-2016 64

Figure 22: Lockheed Martin Corp. – Net Profit Trend Analysis (US$ Billion), 2012-2016 64

Figure 23: Libyan GDP Per Capita at Constant Prices (US$), 2015-2025 76

Figure 24: Libyan GDP at Current Prices (US$ Billion), 2015-2025 77

Figure 25: Libyan Exports of Goods and Services (LCU Billion), 2005-2014 78

Figure 26: Libyan Imports of Goods and Services (LCU Billion), 2005-2014 79

Figure 27: Libya- LCU per US$ (period average), 2015-2024 80

Figure 28: Libya- Goods Exports as a percentage of GDP (%), 2005-2013 81

Figure 29: Libya- Goods imports as a percentage of GDP (%), 2005-2013 82

Figure 30: Libyan Services Imports as a percentage of GDP (%), 2005-2013 83

Figure 31: Libyan Service Exports as a percentage of GDP (%), 2005-2013 84

Figure 32: Libya- Foreign Direct Investment, Net (BoP, current US$ billion), 2005-2013 85

Figure 33: Libya- Foreign Direct Investment, as a percentage of GDP, 2005-2013 86

Figure 34: Libyan Mining, Manufacturing, Utilities Output (LCU billion), 2005-2014 87