Africa is the last wide-open frontier for consultants. Throughout the continent, there are pockets of relatively sizeable, fast-growing, and largely untapped consulting opportunities.
"There is a growing middle class and increasing economic and political stability," says Tomek Jankowski, a Kennedy Consulting Research & Advisory analyst and co-author of research profiling in-country practices and forecasting of consulting demand in Africa. "For the first time, more of the external funds are coming from investment dollars instead of aid."
That investment is primarily coming from mining and energy companies, as well as the traditional mix of industries that are required to grow emerging markets, namely financial services and telecommunications. And when businesses invest, it's a safe bet that consultants aren't too far behind. Case-in-point: Ernst & Young recently invested time and resources on detailed thought leadership on the opportunities across the continent.
Ernst & Young Considers the Possibilities
E&Y's analysis reaches the same conclusion as Kennedy, which is that while there is still widespread poverty (45 percent of the continent's approximately 1 billion people survive on less than $1 per day), on the continent, there are emerging cities ripe for consultants.
Based on a compilation of public sources and its own analysis, E&Y estimates that "investment increased six-fold between 2000 and 2009. Moreover, GDP per household has more than doubled in the last 15 years and is expected to grow substantially this decade," according to the white paper "Growing in Africa."
Overall, E&Y estimates there are 128 million households with discretionary income throughout Africa. As that number increases, aggregated consumer spending will grow substantially. In 2008 (the most recent year available) consumers spent $860 billion across the continent and spending is expected to climb to $1.4 trillion by 2020.
And that spending is becoming more concentrated in big cities. Currently, only 38 percent of the continent's population lives in urban areas; that number is expected to climb to 50 percent by 2030.
There's Sub-Saharan Africa and Then There's Everywhere Else
The African consulting market, at a basic level, can be split into two distinct buckets: South Africa and the emerging markets everywhere else. South Africa is the continent's only mature consulting market, which brings unique challenges, says Karen Nickel Anhalt, a senior analyst with Kennedy Consulting Research & Advisory and lead author of the recently-released research on Africa.
For Western firms looking to expand to Africa, it makes for the easiest transition. "It's a mature market, which means that it's slower growing than the rest of the continent," says Nickel Anhalt. "And the work being done there isn't unlike what's being done in other Anglo Saxon countries like the U.S., U.K. and Australia."
But South Africa's also got problems that are inherent across the energy-strapped continent.
"South Africa uses more power than it generates. Their power infrastructure is in sorry shape," she says. "But there are some super-developed industries: mining, telecom, and financial services in particular."
There's a huge gap between South Africa and every other market. Nigeria is the second largest economy in the region and the second largest consulting market. But its consulting demand is nowhere near the size of South Africa's current market.
Logistical Issues May Hamper Growth in Emerging Cities
Across Africa's emerging markets, one of the biggest problems is logistics. "You can come up with good products, but you have to get them to your customers," Nickel Anhalt says. "And each of the big cities are so far away from each other."
In addition, business basics, like constant and consistent electricity, can be a challenge. "Even in South Africa, opening a business can be a nightmare," Jankowski says.
And the diversity of Africa prevents consultants from becoming regional generalists. "It's not homogenous in any way," Jankowski says. "Each country requires knowledge of different languages, cultures, religions, and approaches to business." But despite the challenges, "Africa is waking up," he adds. "There are huge potentials."
—Jess Scheer
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