Table of Contents 1. Introduction 6 1.1. What is this Report About? 6 1.2. Definitions 6 1.3. Summary Methodology 8 1.4. About Strategic Defence Intelligence 9 2. Executive Summary 10 3. Market Attractiveness and Emerging Opportunities 12 3.1. Current Market Conditions 13 3.1.1. Military fleet size 13 3.1.2. Procurement Programs 16 3.1.3. Key Drivers and Challenges 17 3.2. Defense Market Size Historical and Forecast 19 3.2.1. Kenyan defense budget to grow at a CAGR of 4.09% during 2019-2023 19 3.2.2. Border security, threats from terrorist group, peacekeeping missions, and the need to modernize outdated defense equipment to drive Kenya’s defense expenditure 21 3.2.3. Defense budget as a percentage of GDP will be at an average of 1.3% over the forecast period 23 3.3. Analysis of Defense Budget Allocation 25 3.3.1. Share of capital expenditure is expected to increase during the forecast period 25 3.3.2. Capital expenditure is anticipated to record a CAGR of 4.15% over the forecast period 27 3.3.3. Kenya’s per capita defense expenditure is expected to increase over the forecast period 29 3.4. Homeland Security Market Size and Forecast 31 3.4.1. The homeland security market in Kenya is expected to grow at a CAGR of 2.25% over the forecast period 31 3.4.2. Human trafficking and illicit drugs trade to drive homeland security expenditure 33 3.4.3. Kenya faces a high level of threat from terrorist organizations 35 3.4.4. Kenya faces a high level of threat from terrorist organizations 36 3.4.5. Kenya has a Terrorism Index score of 6.2 38 3.5. Benchmarking with Key Global Markets 39 3.5.1. Kenyan defense expenditure is expected to remain low compared to leading spenders 39 3.5.2. Kenya will continue to remain a small contributor in the global arms market 41 3.5.3. Defense budget as a percentage of GDP is expected to increase over the forecast period 42 3.6. Market Opportunities: Key Trends 43 3.6.1. Top 10 Defense market sectors by value (US$ Million) - Projections over period 2018-2023 43 4. Defense Procurement Market Dynamics 44 4.1. Import Market Dynamics 45 4.1.1. Defense imports increased during the period of 2013−2017 45 4.1.2. Weapons manufactured in Serbia comprised the largest share of imports to Kenya 46 4.1.3. Aircraft and artillery accounted for a total share 86.5% in Kenyan defense imports 47 4.2. Export Market Dynamics 48 4.2.1. Kenya defense exports were negligible during 2013−2017 48 5. Industry Dynamics 49 5.1. Market Regulation 49 5.1.1. Kenya does not disclose any offset obligations imposed by the country 49 5.1.2. Foreign direct investment (FDI) is determined on a case to case basis 49 5.3. Market Entry Route 50 5.3.1. Budgeting Process 50 5.3.2. Equipment manufacturers enter the market through government-to-government deals 50 5.4. Key Challenges 51 5.4.1. Corruption and lack of transparency hinder the growth of Kenyan defense industry 51 5.4.2. Low defense budget to act as obstacle for foreign investors 51 6. Competitive Landscape and Strategic Insights 52 6.1. Competitive Landscape Overview 52 7. Business Environment and Country Risk 54 7.1. Economic Performance 54 7.1.1. GDP per capita 54 7.1.2. GDP, current prices 55 7.1.3. Export of goods and services (LCU Billion) 56 7.1.4. Import of goods and services (LCU Billion) 57 7.1.5. Gross national disposable income (US$ Billion) 58 7.1.6. Local currency unit per US$ 59 7.1.7. Market capitalization of listed companies 60 7.1.8. Market capitalization of listed companies as a percentage of GDP 61 7.1.9. Government cash surplus deficit as a percentage of GDP 62 7.1.10. Goods exports as a percentage of GDP 63 7.1.11. Good imports as a percentage of GDP 64 7.1.12. Service imports as a percentage of GDP 65 7.1.13. Service exports as a percentage of GDP 66 7.1.14. Foreign direct investments 67 7.1.15. Net foreign direct investment as a percentage of GDP 68 7.1.16. Mining, Manufacturing, Utilities Output (LCU Billion) 69 8. Appendix 70 8.1. About SDI 70 8.2. Disclaimer 70

List of Tables Table 1: Kenya Army Strength 13 Table 2: Kenya Air Force Strength 14 Table 3: Kenya Navy Strength 15 Table 4: Kenya - Ongoing Development and Procurement Programs 16 Table 5: Kenya - Future Procurement Programs 16 Table 6: Kenyan Defense Expenditure (KES Billion & US$ Billion), 2014-2023 19 Table 7: Kenyan GDP Growth and Defense Expenditure as Percentage of GDP Growth, 2014-2023 23 Table 8: Kenyan Defense Budget Split Between Capital and Revenue Expenditure (%), 2014-2023 25 Table 9: Kenyan Defense Capital Expenditure (KES Billion & US$ Million), 2014-2023 27 Table 10: Kenyan Per Capita Defense Expenditure (US$), 2014-2023 29 Table 11: Kenyan Homeland Security Expenditure (KES Billion& US$ Billion), 2014-2023 31 Table 12: Terrorism Index, 2018 36 Table 13:Benchmarking with Key Markets - 2014-2018 vs. 2019-2023 39 Table 14: Top 10 Kenya Defense Market Sectors by Value (US$ Million) - 2018-2023 43 Table 15: Kenya Budget Formation Timetable 50 Table 16: Kenya - Competitive Landscape of Defense Industry, 2018 52List of Figures Figure 1: Kenyan Defense Expenditure (KES Billion), 2014-2023 20 Figure 2: Kenyan Defense Expenditure (US$ Billion), 2014-2023 20 Figure 3: Kenya GDP Growth and Defense Expenditure as Percentage of GDP Growth,2014-2023 24 Figure 4: Kenyan Defense Budget Split Between Capital and Revenue Expenditure (%), 2014-2023 26 Figure 5: Kenyan Defense Capital Expenditure (KES Billion), 2014-2023 28 Figure 6: Kenyan Defense Capital Expenditure (US$ Million), 2014-2023 28 Figure 7: Kenyan Per Capita Defense Expenditure (US$), 2014-2023 30 Figure 8: Kenyan Homeland Security Expenditure (KES Billion), 2014-2023 32 Figure 9: Kenyan Homeland Security Expenditure (US$ Billion), 2014-2023 32 Figure 10: Terrorism Heat Map, 2018 35 Figure 11: Terrorism Index, 2018 38 Figure 12: Benchmarking with Key Markets, 2014-2018 vs. 2019-2023 40 Figure 13: Defense Expenditure of the World’s Largest Military Spenders (US$ Billion), 2018 and 2023 41 Figure 14: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2018 42 Figure 15: Kenya Defense Import Trend, 2013-2017 (US$ Million) 45 Figure 16: Kenyan Defense Import by Country, 2013-2017 46 Figure 17: Kenyan Defense Imports by Category (%), 2013-2017 47 Figure 18: Kenya - GDP Per Capita (US$), 2015-2025 54 Figure 19: Kenya - GDP Current Prices (US$ Billion), 2015-2025 55 Figure 20: Kenya - Export of Goods and Services (LCU Billion), 2005-2014 56 Figure 21: Kenya - Import of Goods and Services (LCU Billion), 2005-2014 57 Figure 22: Kenya - Gross National Disposable Income (US$ Billion), 2005-2013 58 Figure 23: Kenya - LCU per US$, 2015-2024 59 Figure 24: Kenya - Market Capitalization of Listed Companies (US$ Billion), 2005-2012 60 Figure 25: Kenya - Market Capitalization of Listed Companies (Percentage of GDP), 2005-2012 61 Figure 26: Kenya - Cash Surplus Deficit as (Percentage of GDP), 2008-2012 62 Figure 27: Kenya - Good Exports as a Percentage of GDP, 2005-2014 63 Figure 28: Kenya - Good Imports as a Percentage of GDP, 2005-2014 64 Figure 29: Kenya - Service Imports as a Percentage of GDP, 2005-2014 65 Figure 30: Kenya - Service Exports as a Percentage of GDP, 2005-2014 66 Figure 31: Kenya - Foreign Direct Investments (BoP, Current US$ Billion), 2005-2014 67 Figure 32: Kenya - Net Foreign Direct Investment as a Percentage of GDP, 2005-2014 68 Figure 33: Kenya’s Mining, Manufacturing, Utilities Output (LCU Billion) 2005-2014 69

Lockheed Martin Lockheed Sikorsky Construcciones Aeronáuticas SA (CASA)/ IPTN Korean Aerospace Industries Boeing (McDonnell Douglas) Samsung Techwin Hyundai Rotem Howaldtswerke-Deutsche Werft (HDW)- Thyssenkrupp Marine Systems, BAE General Atomics Aeronautical Systems Otokar Roketsan Makina ve Kimya Endüstrisi Kurumu (MKEK) Aselsan Turkish Aerospace Industries (TAI), Havelsan Tusas Engine Industries (TEI) FNSS Defense Systems Company Istanbul Shipyard.