Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
PwC has ceased operations in more than a dozen countries that its global bosses have deemed too small, risky or unprofitable, as it seeks to avoid a repeat of scandals that have plagued the accounting network.
The Big Four accounting firm, which operates as a global network of locally owned partnerships, severed ties with its 10 member firms in francophone Africa at the beginning of this month after mounting differences with local partners, according to people familiar with the discussions.
Local leaders said they had lost more than a third of their business in recent years as they were pressed by PwC’s global executives to stop serving risky clients, and began negotiating an exit last year.
The separation was finalised just months after PwC cut ties with its member firms in Zimbabwe, Malawi and Fiji, according to a register of PwC entities and local news reports.
One person familiar with the decision-making process said PwC was dropping smaller member firms that could expose it to reputational risk or did not have the scale to make the required investments in compliance systems. Rival KPMG has told smaller member firms that they must merge, the Financial Times reported last month.
A former PwC partner who held responsibility for compliance matters said international leaders had spent a disproportionate amount of time focusing on Africa despite its low revenues compared with other regions.
PwC’s global chair, Mohamed Kande, has been dealing with the fallout of scandals on multiple continents since assuming the role in July, including at some of PwC’s biggest national member firms.
In China, the local firm was found to have “concealed or even condoned” fraud at the property developer Evergrande and was banned from signing audits for six months, prompting a client exodus. In Australia, revelations that a tax partner had misused confidential government information caused a political furore. In both cases, PwC’s global bosses stepped in to replace local leaders.
The firm has also been barred from working for Saudi Arabia’s sovereign wealth fund for a year.
“PwC became more risk averse than in the past, and we can understand that,” said Nadine Tinen, who was PwC’s senior partner for francophone Africa until the 10 firms split. “When you look at the benchmarks of risk related to transparency and corruption, you will always find countries in francophone Africa. It’s not new.”
PwC’s business in the region had been under heightened scrutiny from global bosses since the Congo Hold-Up revelations of 2021, when leaked documents outlined extensive corruption in the Democratic Republic of Congo, including through banks audited by PwC.
After successive purges of clients named in the leaks, it was a case of “stay and die, or leave and try to thrive” outside the PwC network, according to one local executive.
About half of PwC’s 30 partners in francophone Africa have joined one of two successor ventures: Vinka, run by Tinen, which is based in Cameroon and aims to recreate a Big Four-style accounting and consulting operation across the region, or Mansa, a network of country-based partnerships focusing on tax and legal work. Both ventures say they would maintain PwC standards, but be responsive to local needs.
“The appreciation of risk in Africa can be different if you live here than if you live abroad,” Tinen said.
PwC declined to comment on its retrenchment around the globe, beyond a short statement on its website that the exit of the francophone Africa firms was the result of a strategic review. “The PwC network will maintain a strong presence in Africa and has service continuity plans in place for our clients,” it said.
