A growing market
The defence vehicles segment is expected to register the highest compound annual growth rate over the period 2022-2027. This growth is mainly due to the current plans of Latin American countries to modernise their armed forces and improve their air, land and sea capabilities. Chile, Colombia and Brazil are among the countries currently planning to upgrade their naval forces. The Brazilian navy plans to acquire 21 escort ships, five 13,000 metric ton supply ships, four 20,000 metric ton amphibious assault ships and 40,000 metric ton aircraft carriers in the coming years. Similarly, the Colombian Navy plans to expand its current fleet of frigates to six by 2025 and add two more frigates by 2030.
The land forces of Brazil, Paraguay and Peru, among others, are also considering replacing their ageing fleets of armoured vehicles. The US State Department approved the sale of 178 refurbished Stryker infantry transport vehicles to the Peruvian government in December 2016. The Brazilian military and Iveco Latin America signed a $3.68 billion contract in 2009 for the supply of VBTP-MR model armoured personnel carriers to replace the ageing Urutu CASCAVEL fleet. Deliveries began in 2012 and are expected to continue until 2030.[1]
Armoured vehicles and artillery are highly sought after, as are light weapons, combat aircraft and unmanned aerial vehicles, some with offensive capabilities.
The United States, Germany and France remain the main partners and supply the South American states in various sectors such as communication systems, land, sea and air vehicles, and weapons and munitions. New market opportunities should continue to emerge in this region in view of the widespread increase in military spending and the extensive modernisation plans for military assets. Finally, Chile, Ecuador, Argentina and Colombia are preparing for and integrating the effects of climate change into their defence doctrines, giving a prominent role to military forces in the event of natural disasters.
[1] https://www.mordorintelligence.com/fr/industry-reports/latin-america-defense-market
Colombia: growing opportunities
With a defence budget of US$8.14 billion in 2022, Colombia is the South American country with the highest military expenditure as a percentage of GDP. Major French groups such as MBDA and Thales have a strong presence in the country, even though the safety and defence sector is highly competitive, particularly with Brazil, the United States, Israel and China.
In Colombia, the air force has begun the replacement of its Israeli-made Kfir fighter planes, which have been in service since 1991. The navy is undertaking a plan to renew its surface units – frigates, patrol boats and multipurpose vessels – and to acquire four submarines and two new maritime patrol aircraft by 2042.
Security is one of the most dynamic sectors in Colombia. In 2020, the private security market was worth US$6.7 billion, or 1.6% of GDP, and 856 companies specialised in surveillance. The markets for digital trust, crisis management and surveillance of maritime, land and air spaces are much less exploited than private security or surveillance in the country. A boon for French companies. France is the fifth largest foreign investor in Colombia.
The main opportunities in the field of citizen security and civil security cover the areas of mobility (armoured transport vehicles, armoured vehicles with logistics containers, accommodation, functional tents, mobile equipment for locating and identifying number plates, mobile scanning equipment, hybrid vehicles); armament (ammunition, electro-optical precision rifles, ballistic protection, non-lethal armament, field uniforms with fire, acid and cut-proof protection); communications (facility security, voice and data interception, mobile communications, PDAs for locating equipment and officials, inventory management, etc.); communication (facility safety, voice and data interception, mobile communications, PDAs to locate equipment and public officials, inventory management, etc.).
Opportunities for site security and aerial surveillance are mentioned.
Data intelligence, crowd management solutions, airport security and cyber security are also open markets in Colombia. In terms of cybersecurity, the country is also a target for cybercriminals.[2] In 2021, more than 48,000 cybercrime reports were recorded by the ministry of defence.[3]
[2] La sécurité en Colombie, Business France
[3] https://www.infobae.com/fr/2022/03/18/mindefensa-a-signale-plus-de-48-000-plaintes-pour-cybercriminalite-en-2021/
Chili: between renewal and modernisation
Like other states in the region, Chile is currently in the process of renewing and modernising its equipment, especially tanks and armoured vehicles. The state-owned company ASMAR should deliver a new icebreaker to the Navy by 2024. The company is also working on the construction of two new multipurpose ships. The Chilean government has signed a contract with the American giant Lockheed Martin in 2020 to modernise its F-16 fighters for the Air Force.
Drones (UAVs) are also popular in Chile in many areas including public security. Among the areas of application: use by security companies for monitoring land and for property surveillance. In Santiago, almost every municipality has acquired a drone suitable for the surveillance of its community. In 2021, the minister of the interior announced the increase of drone brigades. Finally, analysts predict that drone sales will increase by 20-30% annually.
Chile is also a country prone to many natural disasters. Earthquakes and floods are frequent. In summer, large forest fires occur throughout the country. Volcanic activity is also a concern. Spain and Chile have identified major areas of cooperation, including simulation, air traffic management (ATM) and cybersecurity.
Brazil : the largest defence budget in Latin America
Brazil, the region’s economic powerhouse, has the largest defence budget in Latin America with US$18.79 billion in 2022. The country relies on its local industry, which consists of 146 companies operating in activities such as the production of aircraft (Embraer), missile systems (Avibras) and patrol ships (Emgepron). As early as 2012, the Brazilian state announced a $300 billion investment in an equipment modernisation plan that would allow it to develop its DTIB but also to import aircraft, armoured vehicles, ships, missiles and sensors from France, the United States and the United Kingdom. The first deliveries of KC-390 aircraft and F-39s developed by Saab have begun. For the Navy, Tamandaré class frigates are expected by 2028. By 2030, Latin America’s first nuclear powered submarine is expected to enter into service.
The European manufacturer Airbus is also present in the Brazilian market since in 2019, 13 C295s were operated by the armed forces. They also equipped the federal police with a fast communication system to monitor safety in stadiums during the 2014 FIFA World Cup. Safran has been established in Brazil for more than 40 years, and is also a leading manufacturer and technology partner to Brazilian industry and government. Today, the group has nearly 700 employees in the country, at four sites. Safran provides local solutions to the Brazilian armed forces and police forces, developing state-of-the-art optronic and avionics systems. The engines are also used in the country’s military helicopters.
The Brazilian army also has relatively large artillery capabilities. The modernisation, or even reinforcement, of these resources within the framework of the VBCOAP programme [Viatura Blindada de Combate Obus Autopropulsada] is under study. It aims аt acquiring 36 wheeled 155mm howitzers. The project is supported by the Brazilian Army Logistics Command. Companies such as Nexter, Elbit Systems and BAE Systems Bofors have reportedly been consulted, as well as Chinese companies, which are gaining a large share of the market throughout the South American region.[4]
While Brazil has a fairly well-developed defence industry, this does not hinder imports. In 2019, the Brazilian security forces (army + police) imported USD 105m FOB worth of arms and ammunition, which is -36.6% compared to 2018 (USD 165m FOB). But 2018 had been an exceptional year. Imports had increased by 256%. The classification of Brazil’s suppliers is headed by the United States (40%), Austria (16%) and the Czech Republic (12%). France exported USD 4.86m FOB of arms and ammunition in 2019, making the country Brazil’s 7th largest supplier, accounting for 3.4% of imports. Israel accounts for only 1.4%, but imports have jumped by 700%.
Highly sought after segments
These include intelligence solutions. The Brazilian Federal Police, as well as some civil police in the states of São Paulo or Rio de Janeiro, constantly need to adapt to the strategies of criminal organisations. The safety forces are therefore interested in COMINT, OSINT and digital solutions.
The SISFRON (Integrated Border Supervision System) programme, designed to effectively monitor Brazil’s 16,000 km of land borders, uses digital, space and electronic warfare resources to control illegal flows between Brazil’s territory and that of its neighbours. Although ambitious, the project has so far received only R$2 billion of the R$12 billion needed to finance it, due to a lack of support in the federal Senate.[5]
The São Paulo Military Police Air Command (CAvPM) has medium-term interest in suits, helmets, winches and rescue equipment, and longer-term interest in an optronic globe and control tools for helicopter maintenance.
[5] « Monitoramento de fronteiras ainda é frágil por falta de verbas, aponta debate », Senado Noticias, 4 July 2019.
Two-figure growth on the cybersecurity market
The Latin American cybersecurity market was valued at USD 5.73 billion in 2021 and is expected to grow at a compound annual growth rate of 11.8% during the period 2022-2027.
Increasing digital penetration, massive internet usage and huge increase in mobile communications in the region are driving demand and the need for cyber security. The high number of attacks across the continent (mainly malware, phishing and denial of service (DoS) attacks) – the number of cyberattacks in Brazil increased by 394% in 2020 compared to 2019 – and the multiplicity of regulations also contribute to the trend. The expansion of wireless networking for mobile devices has increased data vulnerability. The adoption of technologies such as IoT in manufacturing is increasing in the region. Brazil is one of the emerging economies with growing investments in IT infrastructure and increasing penetration of smartphones and the Internet. Although the country is moving towards advanced ICT, it lacks the appropriate regulatory and legal measures for cyber security. As a result, hackers find vulnerabilities to exploit. Thus, the growth of M2M or IoT connections increases the demand for cybersecurity solutions. As things stand, Latin America does not yet have a sufficiently strong cybersecurity foundation to protect the future of its businesses. As a result of these developments, countries such as Colombia, Brazil and Mexico are expected to allocate a significant increase in the security budget over the next few years. A study by Cyber Edge states that Colombia, Brazil and Mexico are expected to lead the way worldwide in terms of increasing security budgets. Among the areas of focus: cloud, network, application and end-point security. Risk management, threat intelligence and response, data protection, and identity and access management (IAM) solutions are among the most sought after.[6]
[6] https://www.mordorintelligence.com/fr/industry-reports/latin-america-cyber-security-market