Consulting market performance in Africa remains varied as stability returns to the north…

2014 was another year of growth across the African consulting market - up 3.4 per cent to $1.7billion. Performance varied widely, with the small markets in the east and west continuing to boom, while in the north stability is returning after a period of political unrest, resulting in growth of 3.7 per cent to $178million.

The Source Information Services (Source) report released today (22nd September 2015) also reveals that Southern Africa, which makes up around two thirds of Africa’s consulting market, recorded negligible growth of 1.2 per cent to $1.2billion. The western African consulting market slowed a little in 2014, but still grew at 12.5 per cent to $179million. Eastern Africa is also booming, and its relatively low dependence on the beleaguered commodities industry contributed to its consulting market growing by 12.3 per cent to $116million.

Northern market mimics European neighbours…
The mature market of northern Africa has recovered from several years of uneven performance, largely thanks to Egypt’s return to pre-Arab Spring levels of stability. Morocco also had a good year, buoyed in part by foreign investment.

The report says that despite lagging behind southern Africa in terms of market size, northern Africa rivals it in terms of maturity, thanks to its close proximity to Europe, which has made it a popular destination for Western firms. The main opportunities for consulting firms lie in the biggest sector, financial services. The report explains this is largely thanks to banks’ growing interest in digitising their operations, particularly with regard to developing their mobile offerings and making good use of the resulting wealth of data.

B.J Richards, Senior Editor at Source and author of the report said:
“Despite encouraging growth in the north, east, and west, the positive picture is marred by some bad news. Libya, a market that’s inspired so much enthusiasm over the last few years, has once again descended into chaos. Consulting here has therefore all but stopped. Algeria, another small but previously growing market, has been hit hard by the oil crisis, which has had a huge impact on consulting spend across sectors.

Tunisia also endured a tough 2014. The birthplace of the Arab Spring, the country continues to feel the aftershocks to a greater degree than most of its neighbours. All of this means that prospects in the region vary widely from one country to the next.”

Political uncertainty contributes to slow growth in South Africa…
Southern Africa’s slow growth is largely a reflection of the tough year endured by South Africa, which is by far the biggest consulting market in the region and on the continent. Low economic growth, falling commodity prices, activity-stunting elections, and corruption scandals and unrest all made an impact. These factors, combined with the slowing effects of maturity and market saturation, made for a difficult market.

Adrian Edwards, Partner at EY explained:
“South Africa is not growing as fast as the rest of Africa - it's pretty mature, and whilst it's a solid market, it's no longer the great hope it was in 2010.”

West and east both booming…
Both the western and eastern African markets recorded strong growth. However, the Source report found that Boko Haram and Ebola issued big blows to confidence and stability in the western market in 2014, and unfortunately, Boko Haram continues to be a factor. Low commodity prices, especially oil prices, have also taken their toll on this resources-heavy economy.

Commenting on west Africa, Bisi Lamikanra, Head of the Nigerian MC Practice at KPMG explained:
“We've just had an election: this went very well and has boosted business confidence because it was peaceful and the first time there was hand-over to the opposition party; given where the country was, expectations are now very high.”

Source’s report also highlights that the Eastern region isn’t without its difficulties. Instability can be a problem with al Shabaab active here, and the consulting market is so small that just a few projects won or lost can significantly alter the shape of things. But this does not diminish the fact that growth is strong and prospects look very good for the foreseeable future.

Africa’s maturing market…
The report explains that as the African market matures and evolves, the composition of the consulting client base is changing, sometimes organically and sometimes by design. This market, which has historically been so dependent on multinational corporations and philanthropic donor organisations, is becoming more focused on local clients, and while foreign investors and donors remain critical sources of revenue, many firms clearly believe that the future of the African market lies in actually serving the African market. 

B.J Richards concluded:
“One thing is clear about Africa: this is a difficult market to call. Although there is a wealth of opportunity across much of the region, this is a market where circumstances can change in a heartbeat. Continued low levels of growth in dominant South Africa are likely to mean modest consulting market growth on the continent overall. So, while you can bet that there will be hotspots, it must be remembered that in Africa nothing is a sure thing.”

For more information on Source reports contact alice.noyelle@sourceforconsulting.com or telephone +44 (0)20 3700 5462 or visit www.sourceforconsulting.com.