Onafriq, a digital funds community that operates throughout 40 African international locations, is winding down Baxi, its Nigerian agent banking business, after 5 years, following what the corporate calls a evaluation of its long-term technique and sustainability.
The firm mentioned in a press release 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 in every of Onafriq’s giant bets on Nigeria’s offline funds economic system, constructed round the concept an enormous agent community may convey monetary providers to prospects who nonetheless relied closely on money. However, financial situations 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 workers whose roles are tied to the business. However, it didn’t disclose the variety of affected workers.
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 providers.
In 2024, the naira lost roughly 129% of its value, falling to ₦1,479 per greenback. Nigeria’s inflation fee additionally reached 34.8% in December 2024, in keeping with Nigeria’s Central Bank (CBN). For a business with a big bodily community, the depreciation and inflation may imply working inputs turned costlier.
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 in depth bodily distribution community to attach Nigeria’s offline funds ecosystem to MFS Africa’s cross-border funds infrastructure, in keeping with the corporate. Baxi’s brokers supplied cash-in and cash-out providers in addition to account opening, cash transfers, invoice funds, and different providers.
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 possibility. 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 would seek the advice of affected workers and assist them via 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 providers market, squeezed by a more durable 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 could wind down its business amid a troublesome 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 robust, with continued progress throughout its cross-border funds community and card issuing providers.
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