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Africa’s economic landscape is undergoing rapid transformation, with four of its economies ranking among the fastest-growing in the world. The irony is that despite all its potential, the continent’s role as a burgeoning business hub remains underappreciated, as does the capacity of its businesses to address some of Africa’s most critical challenges.
As a result, organizations have to depend heavily on consultants and intellectual service providers in general for expert knowledge and insights about their industries there. Then, as opportunities for employment and business development expanding due to increased economic activities, businesses’ dependence on management consulting services also grows.
No wonder, consulting has traditionally been a flourishing industry in Africa, boasting a mix of local and multinational firms which are spread across the continent’s 19 largest economies. Notably, 50% of consulting firms in Africa are solely based on the continent. Although, the sector experienced 14% drop in revenues in the wake of COVID-19, it is steadily on a rebound mode.
But this was only tip of the iceberg as far as African consulting industry is concerned. Client organizations, contemplating hiring any firm in the region, need to dig deeper to understand its nuances. This understanding is important for all consulting service buyers, and especially for those who are often based in financial hubs across North America and Europe but own assets in Africa and require on-site service delivery.
Regional Specificities of the African Consulting Industry
To really get a grasp on the region’s consulting industry, we need to look at how consulting services are customized for the continent’s unique needs. This means checking out how consulting works in the region, the challenges it faces, and how traditional consultants adapt their services.
Plus, we should consider the ways these services are delivered, the industries fueling demand, and the strengths of major consulting firms, along with their operational and geographic quirks. Let’s start by exploring the industries that bring most of the revenues for consulting services in Africa.
Key Industries Driving Demand for Consulting Services in Africa
According to research by Consulting Quest and data from the Global Directory, the top three industries in the African consulting market traditionally include Financial Services, Health & Life Sciences, and Energy & Environment. However, the consulting services available do not always align with the continent’s local needs, which are primarily rooted in Agriculture, Natural Resources, and Financial Services.
Global events such as the COVID-19 pandemic, the ensuing digital revolution, and geopolitical instability, including conflicts in Europe and West Asia, are reshaping the business landscape in Africa. Organizations in the region are increasingly seeking expertise in strategic planning, risk management, and crisis response.
In the post-COVID-19 world, emerging business ventures often target the rising middle class, with one in three Africans now classified as “middle class.” Client organizations are keen to understand the transformation of the consumer marketplace driven by this demographic shift. Key focus areas include:
Business-to-Consumer Technological Enablement: This spans various industries, from government services to banking, aiming to enhance consumer engagement and service delivery through digital platforms.
New Product Development in Financial Services: As financial services evolve, there is a growing demand for innovative products tailored to the needs of a diverse and expanding consumer base.
Customer-Facing Initiatives in the Retail Sector: Retail businesses are focusing on initiatives that enhance the customer experience, leveraging insights into consumer behavior and preferences.
Digital and Technological Migration: Businesses across the continent are increasingly adopting digital technologies to capitalize on the widespread penetration of smartphones, enabling them to reach and engage with a broader audience effectively.
To summarize, as Africa continues to urbanize and industrialize, the consulting industry will play a pivotal role in navigating the continent’s unique challenges and opportunities. For buyers of consulting services, understanding these industry trends is essential.
By recognizing the specific demands and constraints of the African market, buyers can make more informed decisions, selecting consultants who are not only capable but also well-versed in the regional nuances. This strategic approach will enable businesses to leverage consulting expertise effectively, driving sustainable growth and contributing to Africa’s ongoing economic transformation.
Available Capabilities in the African Consulting Market
According to Consulting Quest’s research and data from the Global Directory, the top three capabilities in the African consulting market are Strategy, Human Capital, and Operations. Technology, while the most common capability among large companies with over 1,000 employees, ranks as the fourth most significant capability in the region, compared to its sixth-place ranking globally.
On average, consulting firms in Africa cover 2.5 capabilities. However, nearly a quarter of these firms specialize in only one capability, indicating a rise in niche, local, and small consulting firms.
Post-pandemic, consulting firms are increasingly developing new capabilities to cater to the high in demand services, such as:
Digital Transformation and Technology Advisory: Helping businesses leverage technology to innovate and improve efficiency.
Enterprise and Supplier Development Consulting: Supporting the growth and competitiveness of local enterprises and suppliers.
Turnaround and Business Rescue Consulting: Assisting struggling businesses in restructuring and recovering.
So, we can clearly see how with market shifts and changing needs of the African markets, consulting firms have adapted and evolved their capabilities and continue to specialize. These reimagined capabilities position consulting firms to better serve clients and drive sustainable growth across the continent.
On the clients’ side, understanding the changes in these capabilities will give them a better decision-making power. For example, if your business needs to expand into new African markets, choosing a firm with strong strategic capabilities like McKinsey & Company can provide valuable market entry strategies.
In the wake of the COVID-19 pandemic, many businesses are prioritizing resilience and recovery. Consulting firms that have adapted their services to include Turnaround and Business Rescue Consulting, such as Alvarez & Marsal, are particularly valuable for companies needing support with financial difficulties or restructuring for long-term stability.
Additionally, local consulting firms with regional expertise can offer insights into local regulations and market dynamics, enhancing your market entry strategies. Choosing firms with comprehensive capabilities ensures that you receive integrated solutions addressing multiple business needs efficiently.
Geographic Nuances
The consulting landscape in Africa varies significantly by region. Southern Africa sees slower consulting activity, while Northern Africa is moderate, and Eastern and Western Africa are notably active.
In Southern Africa, South Africa, Nigeria, Ethiopia, Rwanda, and Kenya concentrate most consulting projects. South Africa’s diverse economy, including e-commerce, media, and mining, drives demand for strategic consulting in financial services, retail, and consumer goods. In Nigeria, financial services and new regulations in mobile and telecommunications fuel consulting needs. Ethiopia leads Eastern Africa with projects focused on infrastructure development and industrialization.
Northern Africa features Morocco as a significant hub for European business, thanks to its economic zones north of Casablanca. Morocco’s skilled workforce and French language proficiency further boost its consulting activity.
Across Africa, the SMART Africa initiative, endorsed by the African Union, aims to drive economic growth and job creation through ICT, leading to numerous digital projects. Understanding these regional nuances helps consulting buyers target investments and resources effectively, aligning with areas of highest demand and opportunity.
Unique Constraints that Clients Should Be Aware of
Consultants here have to work within a set of constraints, unique to this region. Clients also need to understand these limitations to enable a better collaborative environment.
Travel Challenges
Traveling within the continent is a significant obstacle for management consultants, particularly those flown in from South Africa. Multi-leg journeys and extended stays can be arduous, especially for consultants with young families. Although travel incentives and stipends are provided, firms often face difficulties in retaining top talent.
Talent Retention and Freelance Solutions
To address capacity issues and enhance their talent pool, many consulting firms are increasingly relying on freelancers. Additionally, there is a growing focus on importing talent, particularly from the African diaspora. It’s a boon actually as these professionals bring valuable skills and experience, along with a deep understanding of the continent’s unique requirements.
Skilled Labor Shortage
A fundamental constraint in the African consulting market is the shortage of skilled labour. Many African countries face significant gaps in skilled personnel, which can impede the execution of complex projects and initiatives.
Infrastructure Limitations
Inadequate infrastructure is another critical challenge. Poor roads, inefficient ports, and inconsistent power supply can severely impact the efficiency and cost-effectiveness of consulting operations. These infrastructure issues can lead to delays and increased costs, affecting the overall success of consulting engagements.
Thus, by understanding the region’s unique challenges, you can better anticipate potential hindrances to your consulting project and create a proactive roadmap to navigate the complexities with greater confidence and effectiveness.
Evolution of the African Consulting Industry Structure – The Rise of Smaller Firms
Large consulting firms (with 1,000+ employees) constitute 29% of the consulting firms in Africa. In fact, major global consulting firms are over-represented in Africa compared to the rest of the world. However, recent corruption scandals involving prominent consultancies in South Africa have shaken trust
For example, the South African branch of McKinsey & Company was implicated in a corruption scandal related to its advisory work for the country’s state-owned freight rail and port operator. This incident marks the first time in McKinsey’s 96-year history that the firm has faced criminal charges.
Additionally, management consultancy Bain has been banned from government contracts for three years due to its involvement in a South African corruption scandal, with the government citing “grave professional misconduct.”
As larger firms face these scandals and reputation issues, smaller, more specialized consulting firms are seizing the opportunity to gain market share. In this situation, more and more client organizations are engaging local consultants for their regional knowledge and agility, which can help mitigate logistical challenges and enhance project outcomes.
Despite the strong presence of foreign companies, 57% of consulting firms in the region are solely based in Africa, and almost half of these firms have fewer than 50 employees. This trend indicates the rise of smaller niche local companies, which are becoming increasingly significant players in the African consulting industry.
Navigating the African Consulting Industry in the Post-Covid Mileu – What Consulting Buyers Should Know?
Impact on Pricing Models
Due to the revenue declines and increased operational challenges, consulting firms might adjust their pricing models to reflect the new market realities. Buyers can expect the following changes:
Increased Rates for On-Site Work: With travel restrictions and logistical challenges, the cost of on-site consulting work is likely to increase. Firms may charge a premium to cover travel difficulties and health precautions.
Shift to Remote Consulting
There may be a greater emphasis on remote consulting services, which could be priced differently. Buyers might find more flexible pricing models, including hourly rates or project-based pricing, as firms adapt to virtual engagements.
Discounts and Incentives
To stimulate demand, some consulting firms might offer discounts or incentives for long-term contracts or bulk service agreements. Buyers should look for opportunities to negotiate better terms.
How might these market conditions influence other aspects of consulting engagements?
Availability of Consultants: The talent pool might be constrained due to travel restrictions and health concerns. This could lead to longer lead times for project initiation and completion.
Focus on Local Talent: With international travel being limited, consulting firms might rely more on local consultants. This shift could benefit buyers by providing consultants with a deeper understanding of local contexts and challenges.
Digital Transformation: The pandemic has accelerated the adoption of digital tools and remote working solutions. Consulting firms might offer more services related to digital transformation, which can help organizations become more resilient in the face of future disruptions.
Risk Management Services: Given the political instability and supply chain disruptions, there may be a heightened demand for risk management and crisis response consulting. Buyers should consider investing in these services to mitigate potential risks.
To summarize It all, for your organization’s investment in consulting services, understanding these scenarios is crucial for making informed decisions. Assess the capabilities of consulting firms, prioritizing those with strong digital skills and local expertise.
Negotiate favourable terms, such as flexible pricing and extended payment options. Develop contingency plans to address potential delays and ensure that the firms have robust risk management strategies
A Client’s Guide to Top Consulting Firms in Africa
Africa’s consulting sector, valued at billions of dollars, encompasses hundreds of consulting firms. This diverse landscape includes major, mid-sized, boutique, and specialty consultancies serving clients across all industries and segments, each specializing in various areas of expertise.
However, only a select few consulting firms can truly claim leadership in the African consulting industry or dominance in their specific niches, due to the highly competitive nature of the business.
To gain insight into the leading consulting firms in Africa, we’ll examine the top players based on their niche and capabilities.
Accenture
Accenture is a global professional services company with leading capabilities in digital, cloud, and security. Combining unmatched experience and specialized skills across more than 40 industries, they offer strategy and consulting, interactive, technology, and operations services. They work with clients in sectors such as financial services, health, and public service, and aim to drive innovation to improve the way the world works and lives.
Alvarez & Marsal
Alvarez & Marsal is a global professional services firm known for its capabilities in turnaround management and performance improvement. They specialize in operational, financial, and performance improvement services across industries like healthcare, financial services, and retail. The firm often assists companies in crisis, helping them stabilize and grow.
Analysys Mason
Analysys Mason is a global consultancy and research firm specializing in telecoms, media, and technology (TMT). They offer strategic, operational, and regulatory advice, as well as market research and data analytics. Their expertise covers areas such as 5G, IoT, and digital transformation, serving clients worldwide in the telecommunications and technology sectors.
Bain & Company
Bain & Company is a top management consulting firm that provides advisory services on strategy, operations, technology, organization, private equity, and mergers and acquisitions. They work with leading businesses across a variety of industries including consumer products, healthcare, and finance, focusing on delivering measurable results and transformative improvements.
Boston Consulting Group
Boston Consulting Group (BCG) is a global management consulting firm and one of the Big Three strategy consulting firms. BCG partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities. Their expertise spans a wide range of industries including technology, media, telecommunications, industrial goods, and financial services.
Cordence Worldwide
Cordence Worldwide is a global management consulting alliance that delivers a diverse set of capabilities and deep industry expertise. They focus on innovation, strategy, transformation, and operational improvement across industries such as manufacturing, financial services, and public sector. Member firms leverage local expertise and global reach to address complex business issues.
Deloitte
Deloitte is a global professional services network offering audit, consulting, tax, and advisory services. Known for its extensive industry specialization and cutting-edge solutions, Deloitte serves clients in sectors such as technology, media, telecommunications, energy, and healthcare. They aim to deliver measurable and lasting results by leveraging deep industry knowledge and global resources.
DuPont Sustainable Solutions
DuPont Sustainable Solutions (DSS) is a global operations management consulting firm specializing in safety, risk management, operational excellence, and environmental sustainability. They serve industries such as oil and gas, chemicals, and manufacturing, helping clients improve their operational efficiency and safety performance.
Ernst & Young (EY)
Ernst & Young, now commonly known as EY, is one of the largest professional services networks in the world, providing advisory, assurance, tax, and transaction advisory services. EY serves a wide range of industries, including consumer products, financial services, and life sciences, with a strong focus on building a better working world through innovation and digital transformation.
GEP
GEP is a global leader in supply chain and procurement solutions, offering consulting, software, and managed services. They serve a broad spectrum of industries including pharmaceuticals, consumer goods, manufacturing, and technology. GEP helps organizations optimize their procurement operations and achieve significant cost savings.
KPMG
KPMG is one of the Big Four accounting firms, providing audit, tax, and advisory services. They have a strong presence in industries such as financial services, healthcare, and technology, offering insights and strategies to help clients navigate complex business challenges and regulatory environments.
McKinsey & Company
McKinsey & Company is a global management consulting firm known for its work in strategy, operations, and organizational transformation. They serve a broad range of industries, including finance, healthcare, and technology, helping clients solve their most challenging problems and achieve sustainable growth.
Mercer
Mercer is a leading global consulting firm that provides advice and solutions in the areas of health, wealth, and career. They specialize in human resources consulting and management, helping clients across industries such as finance, healthcare, and manufacturing optimize their workforce and benefits programs.
Strategy&
Strategy& is the global strategy consulting business of PwC. They offer a combination of strategic foresight and implementation expertise to help clients achieve lasting success. Their industry specializations include aerospace, defence, automotive, and consumer markets, with a focus on creating practical strategies that deliver real impact.
MAC Consulting
MAC Consulting is a leading South African management consulting firm specializing in strategy development, operational improvement, and organizational transformation. They provide services across various industries, including mining, manufacturing, and financial services, with a focus on delivering tangible results and sustainable value for their clients.
Axens
Axens is an international provider of advanced technologies, catalysts, adsorbents, and services, primarily serving the energy sector. Their expertise includes refining, petrochemicals, and gas processing, offering comprehensive solutions to optimize performance, improve environmental outcomes, and enhance operational efficiency.
Black Africa Brand Consulting
Black Africa Brand Consulting is a dynamic firm specializing in brand strategy, marketing, and communications with a focus on the African market. They help businesses build strong, culturally relevant brands that resonate with African consumers, leveraging deep market insights and creative solutions.
Phillips Consulting Limited
Phillips Consulting Limited is a Nigerian-based management consulting firm that offers a range of services including human resources consulting, technology solutions, and business advisory. They work with clients in various sectors such as oil and gas, financial services, and government, aiming to drive organizational performance and growth.
Signium
Signium is a global executive search and leadership consulting firm. They specialize in identifying and developing top talent for senior leadership roles across industries such as healthcare, technology, and financial services. Signium focuses on aligning leadership capabilities with business strategies to drive success and innovation.
Closing Thoughts
The African market is on an impressive growth trajectory, fuelled by rapid economic expansion and a strong governmental push towards innovation. As renowned economist Dambisa Moyo aptly puts it, “Africa’s economic prospects are bright, with a growing middle class and entrepreneurial spirit driving the continent forward.” However, despite its vast potential, the region presents inherent risks, such as political instability and challenges with payment collections.
In the evolving post-pandemic consulting landscape, navigating Africa’s market demands a strategic, value-driven approach. For example, McKinsey & Company’s work with a major telecommunications firm in Nigeria illustrates how crucial flexibility and local expertise can be. By adapting to new regulatory changes, McKinsey demonstrated how tailored solutions can address regional challenges and drive significant results.
Consulting firms play a pivotal role in helping businesses succeed in this dynamic environment. With the right expertise, you can effectively navigate Africa’s complex business landscape, mitigate risks, and seize emerging opportunities. We hope this insight helps you better understand the region’s consulting industry and optimize your consulting budget. For further guidance on sourcing consultants, managing projects, and maximizing your investment, we recommend exploring our thought leadership section.
Frequently Asked Questions
What are the key industries driving demand for consulting services in Africa?
The primary industries driving demand for consulting services in Africa include Financial Services, Health & Life Sciences, and Energy & Environment. However, consulting services are also increasingly needed in sectors like Agriculture, Natural Resources, and the rapidly growing Technology and Digital Transformation industries.
How has COVID-19 impacted the consulting industry in Africa?
COVID-19 led to a 14% drop in revenues for Africa’s consulting industry, but the sector is now in a rebound mode. The pandemic accelerated the adoption of digital tools and services, prompting consulting firms to shift toward remote consulting and digital transformation solutions to meet the changing needs of businesses across the continent.
What unique challenges do consultants face in Africa?
Consultants in Africa face several unique challenges, including travel difficulties within the continent, talent retention issues, a shortage of skilled labor, and infrastructure limitations such as poor roads and inconsistent power supply. These challenges can impact the efficiency and cost-effectiveness of consulting operations.
Why are smaller consulting firms becoming more prominent in Africa?
Smaller consulting firms are gaining prominence in Africa due to the increased demand for niche expertise and regional knowledge. Additionally, recent scandals involving large consultancies have shaken client trust, creating opportunities for smaller, local firms to capture more market share by offering specialized, agile services.
What role does digital transformation play in Africa's consulting industry?
Digital transformation is a critical focus area for Africa’s consulting industry. As the continent experiences a digital revolution, consulting firms are increasingly offering services that help businesses leverage technology for innovation, operational efficiency, and customer engagement. This shift is essential for companies looking to stay competitive in a rapidly evolving market.
How should businesses choose a consulting firm in Africa?
Businesses should choose a consulting firm in Africa based on the firm’s expertise in relevant industries, understanding of regional challenges, and ability to offer comprehensive, tailored solutions. It’s also important to consider the firm’s reputation, experience with local regulations, and capacity to deliver on-site services effectively.
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