The Algerian defense industry, which valued US$9.4 billion in 2012, is expected to grow at a CAGR of 6.2% over the forecast period (2013-17) and value US$13.6 billion by 2017. Recent terrorist attacks in the country have necessitated the increased spending on counter-terrorism and counter-insurgency efforts. Another factor driving the country’s defense spending is Algeria’s involvement in an arms race with neighboring countries such as Morocco, Libya, and Tunisia, which is further fuelled by Russia’s eagerness to supply weapons to these countries. An arms race between countries often sparks reactive defense procurements and this is a trend that has been seen in many North African defense procurements over the last decade.
Figure 1: Algerian Defense Expenditure, 2008-2012
Algeria has borne the brunt of sustained terror attacks for many years and the recent attack on the In Amenas gas facility, that left 37 workers dead, has further strengthened the government’s resolve to enhance its defense capabilities. The Defense Ministry’s recent takeover of the Municipal Guard which was previously under the control of the Ministry of Interior has also warranted large scale defense procurements, with a prime motive to counter terror.
Over the forecast period Algeria is expected to make procurements in areas such as C4ISR systems, drones for attack-grade unmanned aerial vehicles (UAVs), surveillance equipment for ground monitoring, submarines, amphibious ships, naval dockyard infrastructure, fighter jets and associated support systems, armored vehicles, and attack helicopters.