Consulting in Africa: where to start?

By Edward Haigh

In most emerging markets the important decision about where to set up shop is usually a relatively easy one for consulting firms: you either go where your clients lead you, or you find the biggest financial centre and plonk yourself in the middle of it. In the GCC that typically means Dubai or Abu Dhabi. In China it's Shanghai or Beijing. In India, Mumbai. Maybe Delhi. But what about Africa?

The comparison between these is, to some extent, unfair: Africa is a continent (and a vast one at that) while the others aren't. But it's as a single entity that most consulting firms (not to mention economists and analysts) will see it. And quite reasonably too: after all, while it's a consulting market worth a little over $1.4bn as a whole (according to our new report) as soon as you start breaking it down into individual countries, or even regions, the numbers get very small very quickly. We know, we did it. Most firms are trying to figure out what their Africa strategy is, not what their Nigeria strategy is. So where to start? Here are some of the most obvious options:

• Johannesburg. The financial centre of the biggest single market in South Africa seems like the most obvious entry point, and clearly the upside is that you've got a lot of business on your doorstep. But South Africa can feel like an unforgiving place to be a consulting firm at the moment, particularly in light of the country's Broad-Based Black Economic Empowerment policy, which makes the issue of localisation (a problem familiar to consulting firms in every emerging market because of the difficulty of finding local talent with the right skills) into sharp focus. Where many emerging markets encourge, South Africa enforces. What's more, Johannesburg may be well placed to provide access to the other major markets of Southern Africa (Mozambique, Angola and Zambia) but it's an incredibly long way from anywhere else. Interested in opportunities in North Africa? You'd be closer in Europe.
• Lagos. The West African consulting market may only be worth $100m, but it's growing at 39% and that's a rate of growth that you won't find anywhere else in the world. Nigeria's at the heart of that growth, driven by a huge (in relative terms) energy and resources sector and significant investment in technology and operational improvement work. And if you're looking for a place from which to access northern, southern and eastern Africa, this is about as good as it gets. But $100m really is small fry, even by African standards (the financial services market alone in southern Africa is worth nearly three times as much) so you're likely to spend a lot of time making use of Nigeria's location to access opportunities elsewhere.
• Cairo. The most populus African city and the capital of Africa's second-largest economy (behind South Africa), Cairo also offers access to other valuable North African markets like Algeria and Morocco, whist being pretty handily placed for the even more valuable markets of the Middle East, just in case business is a bit flat. But business is likely to be a bit flat for the foreseeable future, and it would take a brave person to decide that now is the time to open an office in Egypt.
• Paris (yes, I know, but bear with me). Twice as close to Cairo, five times closer to Algiers and not much further away from Lagos, than Johannesburg, Paris has plenty going for it geographically. And the result of previous colonial activity means that it's got it quite a lot going for it culturally, too. Indeed, that's why many of the consulting leaders we interviewed for our Africa report were based in Paris. The major (if slightly obvious) downside is that Paris isn't in Africa, and while that might not have presented an insurmountable problem in the past it's likely to do so increasingly in the future as clients demand a greater degree of local knowledge from their consultants.

There are, of course, other ways of looking at this. For a start, the areas in which your firm specialises will have a bearing on the extent to which any of those options look more, or less, attractive. But service specialism, and the location of existing clients all matter when you're weighing up your options. Then again, perhaps you'd do well to heed the advice of someone we know, who spent a number of years building a consulting firm and trying to work out where to open an office next. "Go where your staff would like to go," he told us.

Perhaps we'd better start researching the consulting market in Zanzibar.