Firms need smart entry strategy in burgeoning African consulting market

A new Source Information Services (Source) report estimates that the African consulting market grew by 8% in 2012 to over $1.4bn, but it warns that consulting firms serious about tackling the vast African continent must develop a smart entry strategy.

The Source report says that the continent is both huge and diverse, and choosing a market that plays to a consulting firm’s existing strengths is critical to success. Thiru Pillay, consulting leader at Deloitte Africa commented: “The crucial thing about the African market is that you need to take a long-term view and to be clear about your operating model.”

For many firms the question is where, exactly, to set up shop. Addressing this issue, the report discusses the pros and cons of different locations:

- North Africa – A relatively mature consulting market, physical proximity to Europe, and better-than-average African talent base. But, much of the region is politically unstable and/or susceptible to the moods of Europe.

- South Africa – A mature consulting market with economic and political stability, but it’s far from Europe, and is a market in which finding the right talent is very hard.

- Multi-hub approach - Aggressive strategy giving new entrants access to as many African markets as desired, but prohibitively pricey. This is probably only a realistic option for Big Four firms.

For the purposes of its African report, Source has split the market analysis into North Africa, which grew by 3% to $162m in 2012, Southern Africa, which grew by 7% to just over $1bn, East Africa, which grew by 25% to $71m, and West Africa, which grew by nearly 40% to reach a total value of $100m.

Although the smaller players in the African consulting market, Source says that East and West Africa both show strong potential for further growth as business development and government modernisation through organisational and technology improvements is driving much of the work in the region.

Adekunle Salau, partner & advisory leader, West Africa at E&Y said:
“Over the next few years, demand for consulting in West Africa, especially Nigeria, Ghana, and Liberia will focus on the support needed to grow in economic terms and on the capabilities needed for development. Governments here are modernising their cultures and systems, and they’re trying to improve service delivery and using technologies to help them do that.”

Despite its enormous size, rapid growth, and the abundant enthusiasm to be found in Africa, the report says that the consulting market for the entire African continent is currently less than a quarter the size of the UK market and only about 75% the size of that in the GCC.

B.J Richards, a senior analyst at Source and author of the report, commented:
“The African market is growing and growing quickly, and multinationals and consultants continue to flood in. Who would have imagined 10 years ago that these businesses would be moving into Africa because its booming economy provided them with a cushion against the stagnation in Europe? However, Africa is still very much an emerging market, and doing business there comes with plenty of challenges.”

The outlook

Looking ahead, Source predicts that the African consulting market’s rapid growth will continue for some time. In particular, global consulting firms are counting on this being the case as they are depending on fast-growing Africa to help make up the lost revenues in their more stagnant markets.

Hans Kuipers, principal at BCG, comments:
“BCG is looking towards emerging markets such as Africa to deliver double digit growth. We have great expectations for Africa to deliver on this growth both for our clients as well as our own business.”

The Source report, The African Consulting Market in 2013, analyses the opportunities and barriers to growth across North, South, East and West Africa. For more information on this report contact alice.noyelle@sourceforconsulting.com or telephone +44 (0)20 3178 6443/visit www.sourceforconsulting.com.