The Nigerian Defense Industry – Market Opportunities and Entry Strategies, Analyses and Forecasts to 2015

Active participation in UN peacekeeping missions and operations to stop the smuggling of stolen oil drove Nigeria’s defense expenditure during 2006–2010, and these factors will continue to be important over the next few years. The country’s defense budget stood at 0.8% of GDP in 2010, and is expected to increase only marginally by 2015.

London – 9 September 2011 - Nigeria prohibits direct investment in its defense sector by foreign companies, and direct selling is the only market entry route available for foreign defense operators. Key opportunities for equipment suppliers are expected in areas such as offshore patrol vessels, and multi-purpose and utility helicopters.

Nigeria’s Homeland security expenditure is primarily driven by attempts to combat extremism, drug trafficking, cyber crime and money laundering. Investment in surveillance and intelligence technologies such as electronic identification documents, e-passports, automated border crossing systems and CCTV is expected.

Revenue expenditure expected to increase during the forecast period
Nigerian defense expenditure is expected to exceed US$2.0 billion in 2011, and is forecast to reach US$2.8 billion by 2015. Capital expenditure is forecast to decline to an average of 10.0% during the 2011–2015 forecast period as a result of a reduced budget allocation for equipment purchases. Consequently, revenue expenditure’s allocation is likely to rise to 90% during the forecast period.

Homeland security expenditure expected to match defense expenditure
The country’s homeland security expenditure is expected to grow by over 8% during the forecast period to reach US$2.8 billion by 2015, primarily driven by extremism, drug trafficking, cyber crime and money laundering. In order to counter these threats, the country is expected to invest in surveillance and intelligence technologies such as electronic identification documents, e-passports, automated border crossing systems and CCTV (closed circuit television) systems.

Defense imports expected to increase while exports remain negligible
During the review period, the largest proportion of Nigeria’s defense imports came from China, due to a trade co-operation agreement between the countries. The country also has an economic partnership agreement with Italy, another key import partner. Aircraft, ships and armored vehicles dominated the country’s total arms imports during the review period, and imports are expected to increase, particularly for equipment purchases. The country does not export any arms to foreign countries as its domestic defense industry is under-developed.

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