The 1 industry that is yet to be disrupted in Africa.

Innovation in consulting is still slow

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Finance, healthcare, education and more industries have experienced major technological disruptions, leading to new names/hashtags that we all see often like fintech, Medtech, Biotech, Climatech, you name it! However, the term “ Consultech “ does not exist yet or might not exist as the industry is yet to experience a lot of innovation and is still in its infancy in terms of innovation. This industry is still led by the same fellas (Accenture, Ernst & Young, BCG, McKinsey, KPMG, Bain & Company, Mercer, Strategy&, Deloitte, Analysys Mason, and Alvarez & Marsal) occupying the biggest market share.

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Why innovation is slow in Africa’s consulting industry:

‍‍In 2023, Consulting in Africa was estimated to be worth about 10 billion according to consulting quest, and growing at 5-7% rate per year. This growth is driven by several factors including the need for expertise and consulting services from expanding and growing African businesses, and the rise of African multinationals. In addition, governments of many African countries are increasingly turning to consultants for help with regards to their development goals. As a result, the industry is expected to grow significantly in the next few years.

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So why the slow growth?

Industries such as Finance, healthcare, or education are much bigger, but that alone, does not justify why the 10b consulting industry has experienced less innovation. Here is why:

• It’s a relationship industry: one of the reasons why innovation in  consulting has been slower as opposed to other industries is that companies find it easier to work with the same service providers with whom they have worked with in the past. Mainly because, they have relationships, understand each other’s interest and terms. This is different from finance, or ICT for example, where speed, conveniency, and price are key market drivers

• A higher entry barrier: Judging from outside, one might think that it’s easy to open a consulting shop. That’s not the problem, the challenge arises when it’s time to respond to a request for proposal (RFP), a quote , or a project implementation proposal. Most consulting firms are usually required to prove their track record or experience. This is one of the reasons why the big 5 and top consulting firms are still able to secure large projects. These Large companies still dominate up to 29% of all high revenue projects and are responsible to hire other supporting partners or smaller consulting firms when needed

• The highest demand for service is limited to a few African regions: Consulting in Africa is strongly skewed toward larger countries such as Nigeria and South Africa. Other countries such as Ethiopia have a high demand for consulting, but 2/3 of the industry’s activity comes from south Africa , West Africa and Morocco, which has positioned itself as as a hub for European business in North Africa.

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David Vs Goliath (The fight for Africa’s consulting market is like a David vs Goliath battle)

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David in consulting can be compared to small consulting firms, which all together make up 57% of consulting firms in Africa. These firms operate solely in Africa, but more than 50% of them operate with 25 employees or less. Cumulatively , these firms might make up 60% + of the market but individually, none is big enough to dominate its niche.

On the other hand, Goliath represents large consulting firms such Accenture, Ernst & Young, BCG, McKinsey, KPMG, Bain & Company, Mercer, Strategy&, Deloitte, Analysys Mason, and Alvarez & Marsal. These firms  are industry leaders and generate the most revenue in their respective sectors.

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How small firms are innovating & gaining more market share:

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The reasons above have hindered innovation in consulting, but small to medium consulting firms are finding ways to win, and it's only the beginning. Here is what they are doing:

• Boutique & specialized consultancy: Midsize consulting firms are on the rise, offering niche and specialty consultancies that provide services to clients across all industries and segments, specializing in every imaginable area of expertise. Only a selected few of these companies may claim to be leaders in the African consulting industry or to be major players in their respective niches.
• Technology is changing how consulting is done: The rise in technology is improving and changing how consulting is done, allowing small firms to take part. This is because, both relationships ,expertise , research and collaboration can all be done online, besides speciality programs, capacity building or specific projects, which require local studies and implementation. Larger projects requiring local research, collaboration, and implementation are still being carried out by leading firms , but as for the rest , it’s getting very competitive.

• The rise of part time consultants and experts: The working culture is changing, and more consultants are specializing and working on several projects, both part time and full time. This is is a game changer, allowing smaller firms to compete and deliver on projects affordably, without the ongoing HR cost. In addition, the creator economy is making it easy to find expertise, with most professionals seeking outside gigs, availing themselves, and their experiences for consulting.

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