Consulting in Africa: Long-term investment or big game hunt?

In a recent interview with the BBC, the Vice President of Mozambique likened investors in the country to big game hunters: brash and brave in the daytime pursuit of their quarry, but huddled around the fire, afraid of the dark and the howl of not-too-distant hyenas, at night.  It explains, he suggests why so much investment is focused around the airport, a place of comparative security.

Consultants are no different, our report on the market argues; indeed, they often deliberately follow in the footsteps of investors and, for all the talk of this being the next big market for consulting services, many are sitting round identical fires, peering nervously out into the same darkness.  Instead of in airports and malls, they’re based in the traditional consulting hubs – South Africa and the Maghreb (Egypt, for all the obvious reasons, is no longer a key market) – but the underlying strategy doesn’t vary: focus on the big game out in the open.

But for consultants who know the region well, the opportunities lie outside the circle of light thrown by the campfire.  “It’s a complicated world,” said one we interviewed; “it’s not a homogenous region,” echoed another. “The difference in the maturity of the economies here and therefore the mix of consulting services required are huge,” said a third.  “You simply can’t have a single Africa strategy; you have to translate your plans into separate strategies for regions and individual countries.”

So there isn’t one big hunt at the moment, but a multitude of smaller ones, some taking places in parts of the continent poorly served by infrastructure.  Large, locally-owned and operated companies are emerging, some of whom have the international aspirations which will encourage them to use consulting services in the future – but they’re not satisfied with being served by consultants from an office several thousand miles away.  Crucially, if you drew a simple matrix, plotting size of market against recent growth, you’d find north Africa in the low size/low growth box, southern Africa in the large size / low growth box, and central, east and west Africa in the low size / high growth box; there isn’t anything that’s the equivalent of US consulting market, both large size and high growth.  That makes planning nigh-on impossible: there simply aren’t any big targets to hunt for.  Operational improvement consulting in West Africa might have grown by a whopping 60% in 2012, but it’s from a base so small that in most geographies it would be called a niche market.  The same service in southern Africa generated a respectable $165m in fees and was 9% up on the previous year, but that’s not the kind of growth that is going to excite the senior executives of consulting firms, typically based in large, mature and western markets.  “If all you do is think about what makes financial sense at the macro level globally,” said one interviewee, “then you’ll only focus on projects which are financially viable in mature markets, and that would drive a different investment philosophy.”

The sheer physical scale of Africa creates a unique challenge: traditional big game consulting is likely to yield only a small number of prizes.  Success will depend on a willingness to strike out into the dark, the realisation that a single strategy will not be enough and the recognition that the rewards may be some way off.