In the modern economy, not only do goods transit borders, but also services such as logistical support, telecommunications, land sales, entertainment, graphic design and so forth; and many times, these services are embodied in the trading of goods. By understanding its value and its intricate importance in the supply chain of commerce, governments will be more inclined to invest in and develop the services sector. Governments must ensure they put in place the appropriate e-commerce regulatory framework and build institutional capacity to create the enabling environment that will assist the sector to be competitive in the global economy.
A growing and lucrative sector is management consultancy. Since 2011, the size of the market share for global management consulting has seen a steady increase. Due to the changing business landscape brought on by the new strain of corona virus disease (COVID-19), global management consulting market size is expected to decrease from US$160 billion in 2019 to US$130 billion in 2020.[1] The fortunes of the management consultancy sector in the twentieth century is twofold: the growth of large industrialized corporations and the strategic alignment with financial and banking institutions. For example, in 1933, the Glass-Stegall Banking Act prevented banks in the United States (US) from engaging in non-banking activities, including management consultancy, consequently providing an opportunity for significant growth in the industry. With further expansion of the industry post-World War II, the creation of industry bodies known as Institutes of Management Consultancy in the US and Europe were formed. These institutes acted as quality control mechanisms that certified consultants and provided best-practice guidance and advice on ethics. [2]
Management consultancy is the business of providing management and related advice to a wide variety of organizations or clients and, increasingly, the implementation of that advice. Most definitions tend to exclude the undertaking of operations for the client.[3] According to Consultancy.uk, an online platform for the United Kingdom’s (UK) advisory and consulting industry, management consulting, due to the great diversity in disciplines and varied required capacities of advisors, is the broadest area within the consulting industry, and covers more than 50% of the total global consulting market.[4] Consultancies may also provide organizational change management assistance, development of coaching skills, process analysis, technology implementation, strategy development, or operational improvement services such as processes and procedures especially amid COVID-19 where business continuity is imperative. Different types of consulting services also exist such as realtor services, IT systems development and consulting, outsourcing services and advice, financial consulting, tax audit finance, pure management consulting, and engineering asset management infrastructure, among others. [5] In fact, utilizing the benefits that governments provide to an investor requires the hiring of a local consultant to assist in the navigation of these programs, for example, the drafting of environmental compliance plans, qualified retirement programs, work permit acquisition and/or fiscal incentive applications.
Management consulting services are traded on the international market through four modes. The first mode is cross-border supply of consulting management services which covers the provision of information or solutions to clients via the internet. The second mode is the consumption of consulting services abroad which refers to clients who travel to procure the services of a consultancy firm. The third mode is commercial presence which refers to the commercial establishment of a consultancy firm abroad, either in the form of local branch or subsidiary. The fourth mode covers individuals travelling from their own country to supply services in another, for example, a consultant travelling abroad to provide IT services.
In July 1991, the World Trade Organization (WTO) Secretariat compiled a services sectoral classification list (W/120) to ensure Member States comparability and consistency in commitments undertaken at the WTO. This is a comprehensive list of services sectors and sub-sectors covered under the General Agreement on Trade in Services (GATS).[6] The 160 sub-sectors are less detailed than the categories contained in the United Nations Provisional Central Product Classification (CPC). One of the services sectors of growing interest globally is management consulting services. It is classified under the heading other business services as management consulting service (865), services related to management consulting (866) and related scientific and technical consulting services (8675). At the WTO, many countries have made commitments in this sector. In 2020, a total of 62 countries have made commitments in either all three aforementioned consulting services or in at least one consulting service.[7]
Belize has not made any commitments in this sector at the multilateral level, but it does export management consulting services. According to the International Trade Centre (ITC) Trade Map, estimated export values in consulting management services from Belize to the world from 2014 to 2017 totaled US $21.9 million. In 2014, exports totaled US$6.9 million which fell in following years totaling US$5.9 million in 2017. (Please see Table I below.)
Table 1: Belize’s exports values in Management Consulting from 2014-2017 (US dollars)
|
Exporting Country |
Exported value in 2014 | Exported value in 2015 | Exported value in 2016 |
Exported value in 2017 |
| Belize |
$6,942, 000 |
$5,140,000 | $3,921,000 |
$5,953,000 |
Source: International Trade Centre Trade Map.
Among the Caribbean, Suriname has the highest value of exports in management consulting totaling US $38 million followed by the Dominican Republic with a value of US $26.2 million.
Table 2: Caribbean Export Values in Management Consulting from 2014-2017 (US dollar)
|
Exporting Country |
Exported value in 2014 | Exported value in 2015 | Exported value in 2016 | Exported value in 2017 |
Exported value in 2018 |
| Anguilla |
$1,019,000 |
$716,000 | $199,000 | $177,000 |
$190,000 |
| Antigua and Barbuda |
$1,157,000 |
$3,223,000 | $3,503,000 | $3,661,000 |
|
| Belize |
$6,942,000 |
$5,140,00 | $3,921,000 | $5,953,000 |
|
| Dominica |
$203,000 |
$219,000 | $182,000 |
$157,000 |
|
| Dominican Republic |
$19,700,000 |
$23,100,000 | $28,200,000 | $27,100,000 |
$26,200,000 |
| Grenada |
$567,000 |
$686,000 | $932,000 | $980,000 |
|
| Guyana |
$21,698,000 |
$4,656,000 | $5,696,000 | $6,835,000 |
|
| Jamaica |
$887,000 |
$150,000 | $150,000 | $150,000 |
$150,000 |
| Montserrat |
$1,688,000 |
$1,709,000 | $1,749,000 | $1,491,000 |
$1,547,000 |
| Saint Kitts and Nevis |
$410,000 |
$438,000 | $448,000 | $464,000 |
|
| Saint Lucia |
$2,563,000 |
$4,788,000 | $4,751,000 |
$4,910,000 |
|
| Saint Vincent and the Grenadines |
$2,088,000 |
$621,000 | $521,000 |
$529,000 |
|
| Suriname |
$38,344,000 |
$19,719,000 | $35,835,000 | $35,365, 000 |
$38,647,000 |
| Trinidad and Tobago |
$5,458,000 |
$5, 977,000 | $5,842,000 | $8,854,000 |
$7,551, 000 |
Source: International Trade Centre Trade Map.
Although Belize does not have a formally constituted consulting management association, since 2009, there has been a group of consultants who consistently hold discussions, collaborate on projects or issues of national concern, and share local and international business opportunities. Based on the experience of some consultants, an estimated 15 consulting firms with over 150 consultants exist in Belize in the areas of finance, taxes, law, medicine and marketing. Most of these consultants operate in the Belize and Cayo districts. The vision for the group is to stay relevant, share opportunities and ideas among group members and continue to build on a spirit of collaboration and cooperation.
The group is cognizant of the impact of management consultancy services in Belize and estimates the value of the industry in Belize to be at BZ$20 million. Many local consultants market their services in local tourism and investment magazines and via membership of reputable business associations. Through the Belize Coalition of Service Providers (BCSP), Belize has been able to connect to regional and international partners to grow the industry.
In the absence of an association, participation in regional consulting events are limited due to costs constraints. Despite this, Belize has also been able to compete in sponsored events, trainings and regional conventions, via the BCSP, hosted by the Latin American Association of Service Exporters (ALES)[8] and Caribbean Export. Many consultants have also subscribed to international websites such as the United Nations Development Programme (UNDP), Inter-American Development Bank (IDB) and United Nations High Commissioner for Refugees (UNHCR). Through these subscriptions, international partners provide opportunities for collaboration in areas of expertise and training.
Furthermore, the sector does experience challenges, in particular, the preference among private and public entities to hire international consulting firms instead of Belizean firms and the non-payment of withholding taxes by international consultants as specified by the Central Bank of Belize. One of the unforeseen consequences of COVID-19 has been the travel bans. It has compelled international consulting firms, unable to travel, to procure the services of local firms to execute and complete their services in the Belizean market, which may be fortuitous for the management consulting industry in Belize.
This positive turn, along with an efficient and functional procuring regime, can further bolster the sector. To provide for greater transparency in the procuring process and publication of services contracts, the Government of Belize signed the regional Protocol on Public Procurement for the Caribbean Community at the Heads of Government Meeting in Castries, Saint Lucia on the 5 July 2019 and ratified it on the 4 October, 2019. The protocol provides for a Community Public Procurement Notice Board (CPPNB). The CPPNB is an integrated online platform which is part of the Community Public Procurement Regime. The infrastructure and instruments for an integrated public procurement regime was developed in keeping with the mandate in Article 239 of the Revised Treaty of Chaguaramas Built-in-Agenda in which Member States agreed to elaborate on a Protocol on Government Procurement. Antigua and Barbuda, Barbados, Belize, Dominica and Saint Vincent have signed the Protocol on Public Procurement.
Under the 11th European Development Fund (EDF), Belize was the first country to commence training on the CPPNB in early March 2020. Belize is the only country that has ratified the agreement, and once four other Member States have ratified the agreement, it will enter into force. Below are the regional thresholds outlined in the Protocol:
- Goods: USD $150,000
- Services: USD $150,000
- Works: USD $3,000,000 and USD $ 4,000,000 for Less Developed Countries (LDCs).
More information on the CPPNB can be found at: https://blz-cppnb.caricom.org/epps/home.do.
Another challenge the sector confronts is the high cost of establishing and doing business in Belize. This became more acute with COVID-19, as there exists overhead expenses without incoming revenue. To address this issue, the Government of Belize has embarked on a modernization of the tax administration system to improve service delivery, realize efficiencies, and enhance revenue collection. This reform will assist in alleviating some of the numerous processes and costs that small businesses typically encounter when interacting with tax authorities for payment and refund of taxes. This initiative is in fact also intended to encourage greater compliance with tax obligations by simplifying and automating interactions. The main focus of the project is to amalgamate multiple tax departments into one central Belize Tax Service (inaugurated in July 2019) thereby establishing a single point of contact common to all taxpayers with standardized requirements and simplified procedures for registration, filing and payments. Critically important, the project will also deliver on the government’s commitment to invest in the implementation of a new Integrated Tax Administration System (ITAS) which will automate transactions, enable risk-based tax auditing and empower both taxpayer and government with faster access to data for decision-making and analysis.
In the real estate sector, high visa costs and increased stamp duties on foreign land transactions has affected the sector’s profitability and inflow of foreign exchange into the country. As a consequence of COVID-19, the Lands and Surveys Department has moved most of its land transactions online. Currently, applicants are given tracking numbers that allow them to track the entire transaction. This digitized service will facilitate faster turnarounds and returns on investments. The real estate association continues to work with government on policy issues, particularly, the assessing of transfers of property for additional stamp duty. An objective process is key to justify an increase in the market value, and a fair appeals process, when additional stamp duty is required.
With the unrelenting COVID-19 pandemic, urgency is at the heels of every sector to realign with the new status quo. This realignment will embody a more digital element that will take the form of more virtual offices, which many consulting firms have already established, and the use of electronic platforms to stay connected and viable. Consequently, the Caribbean Network of Service Coalitions has supported national Caribbean coalitions with training on virtual software platforms. Despite this, more changes will come, and the sector must be ready to adapt and refocus even more to survive during and post-COVID-19.
Furthermore, networking, collaboration and cooperation is even more vital at this time within the consultancy field. Consultants need to create synergies in supporting business recovery and growth towards business continuity. Consultants must be updated on new methodologies required for the execution of their service and gain accreditation to attract and successfully fulfil the requirements of competitive bids. If management consultancy firms are unable to innovate and adapt to the new norm, they will be unable to properly advise other businesses.
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[1] Statista, 2020. Retrieved on 12 May 2020 from https://www.statista.com/statistics/466460/global-management-consulting-market-size-by-sector/
[2] O’Mahoney, J. O. (2010). Management Consultancy. New York, NY: Oxford University Press,
[3] O’Mahoney, J. (2016). Management consultancy (p. 269). Edited by Adrian Wilkinson and Steward Johnson. Encylopedia of Human Resource Management. Edward Elgar Publishing. Northampton, MA.
[4] Management Consulting (n.d.). Retrieved on 12 May 2020 from https://www.consultancy.uk/consulting-industry/management-consulting.
[5] O’Mahoney, J. O. (2010). Management Consultancy. New York, NY: Oxford University Press.
[6] World Trade Organization W/120 sectoral classification: Business Services; Communication Services; Construction and related Engineering Services; Distribution services; Educational Services; Environmental Services; Financial services; Health related and Social services; Tourism and Travel Related Services; Recreational, Cultural and Sporting Services; Transport Services; other services not included elsewhere.
[7] Afghanistan, Albania, Argentina, Armenia, Australia, Brazil, Bulgaria, Burundi, Cabo Verde, Cambodia, Canada, Chile, China, Colombia, Croatia, Cuba, Dominican Republic, European Union 25, Ecuador, Eswatini, The Gambia, Georgia, Hong Kong, China, Iceland, Indonesia, Israel, Jamaica, Japan, Jordan, Kazakhstan, Korea, Republic of Kuwait, the State of Kyrgyz Republic, Lao People’s Democratic, Lesotho, Liberia, Liechtenstein, Malaysia, Mexico, Moldova, Republic of Mongolia, Montenegro, Morocco, Namibia, Nepal, North Macedonia, Norway, Oman, Panama, Papua New Guinea, Qatar, Romania, Russian Federation, Samoa, Kingdom of Saudi Arabia Kingdom, Seychelles, Sierra Leone, Singapore, South Africa, Switzerland, Chinese Taipei, Tajikistan, Thailand, Tonga, Trinidad and Tobago, Turkey, Ukraine, United Arab Emirates, United States of America, Uruguay, Vanuatu, Venezuela, Bolivarian Republic, Viet Nam, and Yemen.
[8] The Latin American Association of Services Exporters (ALES) is an international organisation consisting of 35 public and private institutions from 18 countries. The objective is to promote Latin America as a knowledge exporter region and outsourcing destination.