The Nigerian management consulting market is booming, according to a recently released research from analyst firm Source. Spend on consulting in Nigeria has risen to $106.5 million, and the market is forecasted to continue its impressive growth in the coming years.

The African consulting market is currently estimated to be worth roughly $1.5 billion, with two thirds of the market taking place in the Southern Africa region – South Africa is the undisputed heavyweight champion of the continent. Although the African advisory market is from a global perspective relatively small in terms of size – it for instance is 6x smaller than the UK market (~$8.8 billion) – it has grown strongly over the past years. In 2011 the industry was valued by Source Information Services (Source) at $1.28 billion, following 9% growth in 2012 and 5% growth last year the sector is currently assessed at $1.48 billion.

Nigeria, which represents nearly 90% of West Africa’s market, is in the eyes of the analysts one of the key growth drivers. Consulting in Nigeria’s financial services sector for example grew by 35% in 2013, on the back of new banking regulations, forcing them to turn to consultants to help them implement the new requirements. At the same time, the costs of compliance has also put banks under cost pressure, so efficiency programmes and operating model reforms have also driven consultancy work.

Technology, media & telecoms is another industry that faced high demand, growing by more than 30%. “Dealing with competition and the threat of consolidation while also increasing market share and maintaining profitability is driving demand for consulting support,” explains B.J. Richards, researcher at Source and one of the authors of the report. “Nigeria is hot at the moment – we see a lot of demand there. Demand for consulting services is centred mostly around FMCG,” says Hans Kuipers, Principal at The Boston Consulting Group in South Africa.

Similar to the wider African region, foreign direct investment is playing a large role in the renaissance of the Nigerian consulting market. For Africa as a whole foreign investment is in 2014 expected to surpass the previous highs achieved before the financial crisis, and in Nigeria its role is estimated to be even larger. Bisi Lamikanra, Head of KPMG’s Management Consulting practice in Nigeria, says: “Foreign direct investment was a driver of growth, mainly via private equity companies investing in high growth sectors and businesses.”

High reward coupled with high risk
Despite the optimistic outlook for the coming years, the Nigerian market does face a number of risks that could pose a challenge, warns Richards. “Ebola is currently affecting parts of West Africa – Sierra Leone and Liberia, most significantly – which means that consultants are minimising travel around the region, reducing the opportunities available to them. Nigeria is also not an easy place to do business – getting paid can be a challenge, and next year’s elections could be a disabling influence. It is certainly a market that’s somewhat high risk, though currently it’s also high reward.”