This decision marks a significant retrenchment for a major global accounting player in the region and comes amidst reports suggesting a broader pullback from markets deemed high-risk or unprofitable. While PwC's official statement, published on its website, did not explicitly detail the reasons behind the exits, it emphasized the firm's ongoing commitment to the African continent through its established offices in key markets such as Nigeria, Kenya, and South Africa. "We remain confident in the long-term growth potential of the continent," the statement read.
However, the closures follow reports of underlying tensions within the PwC network. Sources familiar with the matter, as cited by the Financial Times, indicate a growing divergence between PwC's global leadership and local partners, particularly concerning the firm's increasing emphasis on de-risking its client portfolio. This push to sever ties with clients perceived as high-risk reportedly led to significant revenue declines for local partners in several African markets, with some experiencing drops exceeding one-third in recent years.
While PwC remained tight-lipped on the specifics of its exit strategy in the nine affected nations, the move raises questions about the viability and profitability of operations in certain African markets for large multinational accounting firms. The structure of PwC as a network of independent but affiliated partnerships suggests that local market conditions and strategic priorities can lead to such significant adjustments.
Furthermore, reports indicate that PwC's strategic review may extend beyond these nine countries. The Financial Times also cited documents and local news sources suggesting that the firm has severed ties with member firms in Zimbabwe, Malawi, and Fiji, although PwC has declined to comment on these specific reports. If confirmed, this would suggest a more widespread re-evaluation of PwC's global footprint and risk appetite.
This retrenchment in Sub-Saharan Africa occurs against a backdrop of increasing global scrutiny on audit quality and governance practices within the accounting industry. PwC itself has faced a series of regulatory challenges in recent months. In January, its China arm was hit with a substantial $62 million fine and a six-month suspension from undertaking new business by Chinese regulators due to audit lapses related to the China Evergrande accounting scandal. More recently, in March, the UK's Financial Reporting Council fined PwC £5 million for failings in its 2019 audit of Wyelands Bank. These instances highlight the growing pressure on major accounting firms to maintain high standards and robust governance across their global networks.
Adding to the complexity, PwC is also actively working to rebuild its relationship with Saudi Arabia’s Public Investment Fund, a major sovereign wealth fund that suspended dealings with the firm's local affiliate late last year.
These developments collectively point towards a period of significant recalibration for global audit firms like PwC. Heightened regulatory pressure, increasing reputational risks, and a renewed focus on profitability and risk management are likely driving these strategic decisions. PwC's scaled-back presence in several Sub-Saharan African nations underscores the challenges and complexities of operating in diverse and sometimes volatile global markets, even for established industry giants. The long-term implications for the accounting landscape in the affected countries and the broader African continent remain to be seen, but this move undoubtedly signals a notable shift in PwC's strategic priorities.