Military expenditure within the Lebanese defence industry has been forecast to increase at a compound annual growth rate (CAGR) of 5.66% over the next five years, increasing from a value of $110 million in 2013, and is projected to hit a total of $150 million by 2018.
Lebanon's defence budget is small, reaching its peak of $1.2 million in 2013, and does not attract many foreign companies.
Over the past five years, an average of 19.2% of the defence budget was allocated for capital expenditure on defence equipment, and this small amount of the budget does not attract many companies to supply arms to, or invest in, the country.
Lebanon, one of the poorer countries in the Middle East region in terms of natural resources, is mired by cross border violence, internal extremism, and hostile neighbours.
The country's weak economic condition affected its defence capabilities, resulting in a volatile security situation for the past two years. Spill over of violence across its borders has put pressure on its government to prioritize military modernization in recent years.
The equipment of the Lebanese Armed Forced is outdated due to lack of funds, political bickering and until recently the presence of foreign forces. After the conclusion of the Lebanese Civil War, the LAF decided to repair as much of its equipment as it could, while being aided by modest donations from other nations.
About 85% of the LAF's equipment is American-made with the remaining being British, French, and Soviet-made.
Restrictions by the US and other major nations on supply of advanced weapons to Lebanon further increases the challenges, as defence contractors might not find it feasible to violate the embargo to cater for a small market.
Lebanon, which shares borders with Israel and Syria, is stalled by cross border violence on both sides.
It maintains an open border policy with Syria, which is going through political turmoil, resulting in an increased burden of one million Syrian refugees on its economy and security forces. Lebanon had a long history of sectarian violence, which is now being fuelled again by cross border insurgency.
For more information on the Lebanese military industry, see the latest research: Lebanese Military Industry
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