Onafriq, a digital funds community that operates throughout 40 African international locations, is winding down Baxi, its Nigerian agent banking business, after five years, following what the corporate calls a overview of its long-term technique and sustainability.
The firm mentioned in an announcement on Friday that inflation, naira depreciation, rising working prices, decrease buying and selling volumes, margin strain, and the fast progress of immediate account-to-account funds have made the offline agent banking business unsustainable.
Baxi was one among Onafriq’s giant bets on Nigeria’s offline funds financial system, constructed round the concept an unlimited agent community may convey monetary companies to clients who nonetheless relied closely on money. However, financial circumstances made sustaining that community tougher.
“We entered Nigeria with conviction and commitment, but did not achieve the outcome we set out for,” Dare Okoudjou, Onafriq’s founder and chief govt officer, mentioned. “Closing this business was a difficult decision to arrive at, one that affects colleagues, agents, and business partners across Nigeria who poured their hearts and soul into building out the Baxi network.”
Onafriq mentioned the choice will have an effect on staff whose roles are tied to the business. However, it didn’t disclose the variety of affected staff.
Baxi brokers have been transitioned to a different principal financial institution and requested to maneuver their funds to their most well-liked principal financial institution inside 30 days. Onafriq will proceed working in Nigeria as a Payment Solution Service Provider, specializing in its funds community and card issuing companies.
In 2024, the naira lost roughly 129% of its value, falling to ₦1,479 per greenback. Nigeria’s inflation price additionally reached 34.8% in December 2024, in line with Nigeria’s Central Bank (CBN). For a business with a big bodily community, the depreciation and inflation may imply working inputs turned dearer.
Onafriq started agent banking in Nigeria by buying Capricorn Digital in a deal announced in October 2021. At the time, Baxi had greater than 90,000 brokers and had processed greater than $1.6 billion in transactions in 2021. The acquisition was Onafriq’s route right into a fee market that also had its monetary system closely reliant on banks and money.
The plan was to make use of Baxi’s intensive bodily distribution community to attach Nigeria’s offline funds ecosystem to MFS Africa’s cross-border funds infrastructure, in line with the corporate. Baxi’s brokers supplied cash-in and cash-out companies in addition to account opening, cash transfers, invoice funds, and different companies.
However, Nigerians’ fee behaviour started to vary as immediate account-to-account transfers turned extra widespread. The quantity of Internet transfers within the first half of 2024 was 11.6 billion, in contrast with the 6.3 billion for the point-of-sale (PoS) fee choice. At the identical time, competitors from fintechs, together with Moniepoint, OPay and PalmPay, started to develop and dominated the PoS agent-banking market.
Onafriq mentioned it’ll seek the advice of affected staff and help them by means of the transition and proceed to honour its commitments to brokers and different stakeholders because the business winds down.
Onafriq’s exit from agent banking comes amid a pullback by some fintechs from Nigeria’s monetary companies market, squeezed by a harder funding setting and rising working prices. In May, Chimoney, a cross-border funds infrastructure firm, ceased operations after struggling to boost sufficient capital to proceed operations, whereas Gigbanc introduced in July that it will wind down its business amid a tough fundraising setting.
“This decision is confined to the agent banking business in Nigeria and does not represent an exit from the Nigerian market,” the corporate added within the assertion. “Onafriq Group stays sturdy, with continued progress throughout its cross-border funds community and card issuing companies.
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