Audit, tax advisory firm Deloitte exits Zimbabwe

Deloitte in South Africa. Picture: Timothy Bernard/ Independent Newspapers

Deloitte in South Africa. Picture: Timothy Bernard/ Independent Newspapers

Published Feb 16, 2024


AUDIT, tax and accountancy advisory company Deloitte is exiting Zimbabwe, with its management in the country buying out the operation, a development that may point to a shrinking market for the services it offers.

The exit of Deloitte comes on the heels of the departure of banks such as Standard Chartered and Barclays. However, other accountancy and audit firms such as EY are still offering services in Zimbabwe.

“This heralds the exit of one of the big four firms. The reasons for the exit may be many, but principally a lack of competitiveness, a shrinking market, etc. The event may not necessarily be a major one on its own unless followed by exit of other big firms such as PwC,” said banker and economic analyst Matthew Chidavaenzi.

Zimbabwean accountancy and tax expert Emmanuel Mapamba said a management buy-out of a professional services firm such as Deloitte signalled a low selling price of the entity. Other partners at Zimbabwean audit and accountancy firms said the Zimbabwean market has been shrinking, with local alternatives raising competition.

“In accounting, especially professional services, management buy-out is when the CEO or directors seek a buyer to help in the acquisition of the company. This is done with the help of the CEO or directors (and) it may be because it was a loss-making unit for the Deloitte Africa,” said Mapamba.

He added: “Buying a company using management buy-out sometimes means it is purchased at zero cents or at a low price, below it’s fair price.”

Deloitte has announced that it is exiting Zimbabwe this year, with the existing partners taking over the business to ensure continuity and service to clients. The advisory firm last year announced Charity Mtwazi as the new CEO.

“This mutually agreed decision to exit the Deloitte network was based on being able to better serve the unique needs of clients in Zimbabwe,” the company said.

Deloitte’s exit from Zimbabwe and the subsequent buy-out by management followed “extensive discussions between Deloitte Africa and Deloitte Zimbabwe”, Mtwazi explained.

“With the exit of Deloitte in Zimbabwe, we will be ushered into a new phase. We are excited to continue our legacy of serving clients in Zimbabwe, but under a different brand. Importantly, the team responsible for service delivery remains the same, ensuring continuity and client trust,” she added.

Zimbabwe’s hyper-inflationary economic environment has posed challenges for accountancy and audit firms, with prospects and contracts diminishing as businesses have either scaled back spending on international professional advisory service providers or closed shop completely.

“There have been so many changes in the macroeconomics and legislation in Zimbabwe, a key component of understanding the clients’ environment. This is something that only locals understand well, and a foreign reviewer cannot keep him/herself abreast of,” said one chartered accountant.

He added that over the past few years, several listed companies in Zimbabwe had been “getting qualified opinions due to a number of issues, including currency changes, determination of functional currency, hyperinflation, and non-compliance with legislation in cases where legislation goes against International Financial Reporting Standards”.