African consulting market grows 5% to nearly 1.5 billion

27 October 2014

The African consulting market grew last year by 5% to nearly $1.5 billion, according to a research report from analyst firm Source Information Services (Source). Double-digit growth in West Africa, particularly in Nigeria, and East Africa were the key drivers. For 2014 and beyond, the outlook is positive, and the key area for firms will be on how then can successfully capitalise on the potential.

Over the past years the consulting industry of Africa has demonstrated strong growth, both in size and its maturity. In 2011 the industry was valued by Source at $1.28 billion, yet following 9% growth in 2012 and 5% growth last year, the sector is currently assessed at $1.48 billion, slightly larger than the Indian consulting market and nearly 6x smaller than the UK market (~$8.8 billion).

West Africa and East Africa enjoyed spectacular growth rates, with 26% to $123 million and 18% to $89 million respectively. Both regions benefited from their wealth of natural resources, a growing middle class, good levels of foreign investment and an improving manufacturing base.

African Consulting Market

In contrast the report found that South Africa – the undisputed heavyweight champion of the African consulting market – had a difficult year. Slowing GDP growth, a pre-election hiatus in the run-up to May 2014, and instability triggered by a wave of strikes in the mining sector have all taken their toll. Both domestic and foreign investment has suffered as a result, and this led to consulting in Southern Africa only growing by 2.5% to $1.1 billion.

Positive outlook
Looking forward, the analysts are positive about the outlook, with foreign investment considered as the key growth driver. “In 2014, foreign investment is on the upswing with levels expected to finally surpass the previous highs achieved before the financial crisis. This money – so important to African development – will be coming from a number of sources, with aid agencies, big multinational corporations, institutional investors, and private equity interests all expected to be highly active this year. This infusion can be expected to have a huge and positive influence on the consulting market,” writes Source.

For consulting firms, they key to successfully capitalising on the potential in the African market will lie in moving beyond their initial African hubs and establishing a wider presence, says Source. Just recently for instance McKinsey & Company opened an office in Nairobi, Kenya – its 7th in the African continent. In addition, with so much business to be distributed, competition is heating up, and large firms will need to strike the right balance between competing against versus partnering with these small firms to meet local demand.


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