Market Trends of Middle East And Africa Defense Industry
The Vehicles Segment to Experience the Highest Growth During the Forecast Period
The vehicle segment is expected to be a fast-growing segment in the Middle East and African defense market during the forecast period, mainly due to the growing threats to regional security, modernization programs, and technological advancements. The ongoing geopolitical tensions, as manifested through the conflicts in Yemen and Libya and counter-terrorism operations across the region, have brought about hefty investments in modern armored vehicles, given their enhanced protection, mobility, and firepower characteristics against advanced enemy threats in contemporary warfare and peacekeeping missions.
Countries such as Saudi Arabia and the United Arab Emirates are at the forefront, where the latter has ordered the most significant number of procurements to date, such as Oshkosh Defense's JLTVs and the modernization of existing fleets with state-of-the-art systems like Patria's AMV XP. The integration of advanced technologies like Active Protection Systems, C4ISR, and hybrid-electric propulsion systems is increasing demand for this segment even more. Other factors, like strategic cooperation and joint ventures between regional nations and significant defense firms, drive local production capacity. Such collaboration is best manifested in the deal between UAE's EDGE Group and Turkey's FNSS to produce Rabdan 8x8 vehicles.
Emphasis on indigenization and self-reliance in defense manufacturing under broader initiatives, such as Saudi Arabia's Vision 2030, is significantly driving the development of the domestic defense industrial base for the growth of this segment. Moreover, the versatility of armored vehicles for various military operations, from conventional wars to counter-insurgency, coupled with an increasing focus on homeland security and law enforcement functions, significantly contributes to the market expansion.
While there has been a rise in geopolitical tensions, regional conflicts, and counter-terrorism operations, the versatility, operational efficiency, and less risk to personnel are making the defense forces adopt UAVs. Countries such as Saudi Arabia, the United Arab Emirates, and Israel are at the front end of making their defense arsenals saturated with UAVs, either with an indigenization program or through international cooperation. For example, the local production of the CH-4 and Wing Loong II UAVs by Saudi Arabia in collaboration with China and the extensive deployment of Heron and Hermes UAVs by Israel are examples of the current trend.
Rapid technological change, especially in UAVs, such as increased payload capacities, extended flight endurance, and advanced sensor systems, is remarkably expanding their operational scope. UAVs fitted with state-of-the-art electro-optical/infrared (EO/IR) sensors, synthetic aperture radar (SAR), and electronic warfare (EW) systems provide unmatched situational awareness and precision strike capabilities. Moreover, the integration of AI and ML algorithms enables autonomous operations and real-time data processing, further enriching mission effectiveness.
In June 2023, Israel's Ministry of Defense took delivery of its inaugural Namer 1500 armored personnel carrier (APC). The Namer 1500, part of Israel’s flagship Merkava and Armored Vehicle Directorate project, is set to succeed the nation's aging M113 APCs.
Saudi Arabia to Dominate Market Share During the Forecast Period
Saudi Arabia's dominant market share in the Middle East and Africa is driven by significant infrastructural investments, technological developments, and strategic initiatives envisaged in Vision 2030. Saudi Arabia has used large inflows of its oil revenues to diversify the economy in areas like defense, aerospace, and renewable energy. Growing factors include the creation of NEOM, a USD 500 billion smart city project, and substantial military procurement programs to enhance the capacity to protect itself. Moreover, Saudi Arabia's geography as a logistics hub allows for colossal trade and investment inflows. Other market growth drivers include the country's strategy for developing indigenous manufacturing capabilities and forging public-private partnerships.
Collaborations with international technology companies and defense contractors position Saudi Arabia's commitment to becoming a regional leader in innovation and economic diversification. The government's policy to transform the digital economy and invest in emerging technologies like AI and UAS should remain a leading factor in sustaining its market lead. In February 2024, Munitions India secured a USD 225 million contract from Saudi Arabia for 155mm artillery shells. Weighing around 45 kilograms and measuring about 60 centimeters, these 155mm rounds are predominantly utilized in howitzer systems—massive cannons that adjust their barrels at varying angles for the desired range.
Additionally, in February 2024, the Ministry of Defense of Saudi Arabia signed numerous strategic contracts and MoUs at the World Defense Show in Riyadh to reinforce military readiness and combat efficiency through manufacturing localization in line with the directions of Vision 2030. These include contracts with PrivatAir Saudi Arabia, LIG Nex1, Raytheon Saudi Arabia, Middle East Propulsion Co., SAAB Saudi Arabia, SAMI Aerospace and Maintenance Services, SAMI LAND Systems, Haji Husein Ali Reza & Co., Modern Technology Co., Saudi Arabian Thales International, Big Blue Pearl Co., and Saudi Information Technology Co. These signed contracts and MoUs reflect a big step toward enhancing the military readiness and capabilities of the Saudi Armed Forces while fostering local industry growth and technological advancement in line with national strategic objectives.
