As Ghana’s economy continues to grow, the business of consulting is growing apace, enabling thousands of professionals, including many retired people, to call themselves consultants. But while many Ghanaians are entering the consultancy field, it would seem to many practitioners that the real beefy assignments are invariably won or assigned to foreign-based consultants or at best to their Ghanaian offices. The consulting industry in Ghana seems to be based on a more practical, grassroots need, preferably one that is visible. For example, an advertising consulting firm is appreciated by its client for its ability to quickly erect a big shiny billboard soon after it has been engaged. A telecom consultant, to be well appreciated, may need to help to close a large financial transaction within a certain time-frame. Nonetheless, amidst the myriad of services provided, there seems to be lack of appreciation for business strategy, an aspect of consultancy which has brought US consulting firms such as Bain and Boston Consulting Group to international prominence. Unlike their counterparts in the US and other developed economies, the focus of Ghanaian consultants tend to be more narrow and specific, often determined by client needs. Understandably, intangibles are much more difficult to sell.

The Playing Field

Most Ghanaian business executives define the consulting services market as a diamond; at the very top are very few foreign based/owned firms, such as McKinsey and Monitor, who do real, hardcore advisory work for specific big-dollar industries such as mining, banking and telecom or for controversial transactions such as the sale of Ghana Telecom (GT).  Kofi Bucknor, a business executive operating in the private equity space in Ghana, explained that he has used consulting firms both to conduct research and analysis for his global clients as well as for his own firm. For example, McKinsey had been employed to determine the prospects in Africa of pursuing a certain investment transaction in the airline industry and in the insurance market - markets that are very technical and require a high level of expertise. However, he also indicated that he has employed internationally recognized consulting firms based in Ghana to provide strategic insight into administrative issues such as the compensation structure of his own firm.

The second tier of consultants are those professionals that are retired from industry or from Multilateral Development Banks (MDBs) that are reaching back to their old organizations or networks to be able to advise those organizations for sometimes thousands of dollars more than what was their former salary. The third tier (but probably equal in size to the second tier) include those who use somewhat nepotistic means to get clients. These are the relations of prominent executives in industry or various government ministers, who may have some specific skills in a certain area but are clasping onto someone else’s position to feed them. Unemployed and retired citizens of Ghana register a firm relatively easily and some quite quickly are able to wield around the murky title of consultant without being an expert in anything. Although this is not necessarily different than in other countries, the practice seems just a little more blatant in Ghana.

The idea that consulting contracts are awarded on the basis of nepotism as opposed to a genuine competitive bidding process or leadership in the marketplace is a true and worrisome phenomenon. There is a view in Ghana, that many contracts are often given to people based on who they know, who knows who, and not what they know. It would seem that to succeed as a consultant in Ghana for contracts in the $20K - $500K range, many sometimes are required to sell more of themselves, than the competencies of their business.

A private equity banker, Kwabena Osei-Boateng, newly returned to Ghana after a stint in South Africa at one of the global consulting giants, describes his view of the consulting environment as “neutral to positive.” He identified one clear challenge though. “There are many one-or two-man consultancies who get jobs from their friends and not necessarily many well-established local firms who are very good across various industry sectors. The ability to build scalable businesses is a systemic problem. For example, very few law firms in Ghana have more than 3 partners.”

When asked why the industry seems to be so saturated by small “mom and pop” firms versus large foreign partnerships like PWC, KPMG or Deloitte Consulting,  Mr. Bucknor replied that “although the barriers to entry are relatively low, the overhead required to employ and maintain the top talent, to get the expertise required to attract the $1 million contract McKinsey is going after, are too restrictive”. There is also a view that some Ghanaians have difficulty in sharing equity with others to do business, and not just in the consulting sector.

But then upon the horizon lies hope for the average “Ghana-man”, as Ghanaians often call themselves. The last level, those on whose backs the industry might actually survive (for the right reasons) are 20-35 year olds who have had short but prominent careers at the institutions at the top of the diamond, typically abroad, who are trying to replicate the consulting models used in the USA, UK, South Africa, Kenya and elsewhere while keeping the Ghanaian flavor.  A generation that is not so much concerned about being the only person in the company’s organizational chart but more concerned about being efficient and stable in the marketplace. Yes, finally maybe clients can get some well-written reports without typos.

As far as the tip of our nose

Even KPMG Ghana’s revenue from advisory work is eclipsed by their more traditional tax and audit (regulation mandated) practice. The idea of companies and public institutions paying for thought leadership in Ghana is negligible. To be fair, most business executives want from consultants information on such specific matters as changes in corporate tax policy and on market expansion opportunities, but will tend to produce in-house the detailed, analytical reports dealing with other matters that impact the organization.  However, business leaders approached with this topic were careful to say that this outlook is only applicable to certain industries. Bigger firms or those headed by foreigners are likely to hire consultants to investigate the “big picture”.

The Association of Ghana Industries (AGI)’s Business Barometer 2nd Quarter 2010 Summary Report states that “less than 50% of business executives operating in Ghana are optimistic that the overall business environment would improve in the third quarter of 2010,” communicating that the top three challenges facing them are high cost of raw materials, high utility prices and cost of credit. The AGI Business Barometer Index which measures the level of confidence in the business environment recorded a negative value (-0.21)  for the first time since June 2009. This shows that business confidence in the economy was very low over the period under discussion. This kind of anxiety in the business environment in another setting would put consultants in high demand. It is hoped that business executives are being proactive and looking around for professional help to prevent the demise of their businesses rather than just whine about the situation, as implied in the AGI survey.

Is Google taking over consulting?

From the perspective of political risk analysts of the caliber of Eurasia Group, a school of thought says it is possible that the Information Age has numbed everyone to the idea of paying for knowledge. A company may ask itself: “If I can find the answer on Ask Jeeves, Wikipedia or Bing, what is the use of a consultant?” After all, if the all-powerful Newsweek magazine could tumble into bankruptcy and be sold for $1, the universe is clearly saying that information is meant to be free.

But there is a distinction between information and analysis and in Ghana, the two are often confused. Although Vodafone and MTN have strategy and research units in-house, thought leadership generally seems to be a foreign concept in Ghana. Nonetheless, even the “big boys” question the value of ideas. An article in The Economist, from the week of September 11-17th, speaks to the inability of companies to legitimately track revenues generated from the release of analytical reporting. But, the Economist article makes it very clear that the most lucrative consulting firms in the world do not intend to stop producing these reports and even question if they are doing enough.

The consulting giants still pour millions of dollars into research facilities like McKinsey Global Institute (MGI) and IBM’s various research facilities that center on issues key to their business and their clients, such as e-commerce and data privacy. Their clients love them for it and that is how they are able to differentiate themselves from the pack.

Why is industry in Ghana not funding institutions like the American Enterprise Institute, Brookings Institute or the Center for Strategic and International Studies? Mr. Kenneth Bone, an entrepreneur who was looking to establish an e- commerce business in Ghana says “there are always money making opportunities in a perfect market with imperfect information.” The implication is that there is a vested interest by the consulting industry, to keep information, research and data under the rug. The implication is that industry does not publicly fund research because they stand to gain by keeping their customers a bit in the dark.

However, local businessmen, such as Mr. Herman Chinery-Hesse, an e-commerce and technology entrepreneur, say that this is not true. Information may not be as commoditized as it is in the West because it is readily available and therefore makes many consultants obsolete.

As Mr. Hesse puts it, “if you want to open a nail shop in Accra, if you are from the U.S. or elsewhere in the West with no local network, you might want to hire a consultant to do a market analysis, inform you of the pricing structures and profit margins, the level of competition etc. In Accra, all you would do is call up your friend who knows that woman who owns the nail spa down the street from your house in Labone and meet up with her at Golden Tulip to chat over beers.”

The information business is also the people business in Ghana and there is no specific premium put on information. Getting a firm grasp on even the number of consultancies registered in Ghana is problematic. The Ghana Business website, www.ghanabusiness.com lists 232 firms in its business directory but these are not sortable, meaning photographers are mixed in with asset managers and agro-processing specialists. Without a network, not only is it difficult on the supply side (getting business as a consultant), but it is also hard on the demand side (locating competent local consultancies).

Conversely, some may look at the fact that information is ‘free’ as an incentive to not disseminate the information they may have at their disposal or be able to produce. Industry in Ghana even at the highest level is very reactionary. Big budget businesses want to minimize risk by doing what is tried and true.  They will wait for a single firm to do something and if it works,
the competitors will adopt the same strategy, often whether or not it fits their specific business model. Free ridership continues.

More importantly, the management of Western-based firms have shareholders to report to as well as the ever angry U.S. taxpayer who is stalking their bonus checks looking for justifications as to why the manager is earning that much.  Certain businessmen just do not want to discuss business secrets with people who may decide to pursue it themselves. There are no repercussions for ‘insider trading’ in Ghana of the caliber of the very dramatic IBM-hedge fund insider trading ring that broke out in July 2010 involving Robert Moffat and his wall street mistress. In Ghana, this might be considered normal business.