Despite a relatively small defence budget, Nigeria’s military spending is set to grow, with expenditure expected to reach $2.8bn by 2015, finds Strategic Defence Intelligence.

New research* from the defence business intelligence platform has revealed that during 2010–2015 Nigeria’s overall defence expenditure is estimated to grow at a compound annual growth rate (CAGR) of 8.26%, reaching $2.8bn by 2015.

Berenice Baker, editor of Strategic Defence Intelligence (SDI), said: “In recent years, Nigeria’s defence spending has been stimulated by active participation in UN peacekeeping missions and operations to stop the smuggling of stolen oil. These factors are expected to continue to drive defence expenditure through 2015.”

SDI believes that key opportunities for equipment suppliers are expected in areas such as offshore patrol vessels and multi-purpose and utility helicopters. Defence budget allocations for the army, navy, air force and others averaged 36%, 19%, 21% and 24% respectively during the review period.

The country’s homeland security expenditure, estimated at $2bn in 2011, is expected to register a CAGR of 8.21% during the forecast period to reach $2.8bn by 2015. Nigeria’s homeland security expenditure is primarily driven by extremism, drug trafficking, cyber crime and money laundering. In order to counter these threats, the country must invest in surveillance and intelligence technologies such as electronic identification documents, e-passports, automated border crossing systems and CCTV (closed circuit television) systems.

There remain several barriers to entering the Nigerian defence market. Since the country prohibits foreign direct investment (FDI) in defence sector, direct selling is the only market entry route available for foreign defence operators. The country is expected to allocate a relatively low $2.1bn in 2011 to defence expenditure, which may act as a barrier to foreign operators. Corruption, which may result in the unfair allocation of contracts, can also limit market entry.

*The Nigerian Defence Sector: Market Opportunities and Entry Strategies, Analyses and Forecasts to 2015.