Onafriq, a digital funds community that operates throughout 40 African nations, is winding down Baxi, its Nigerian agent banking business, after 5 years, following what the corporate calls a assessment 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 development of prompt account-to-account funds have made the offline agent banking business unsustainable.
Baxi was considered one of Onafriq’s giant bets on Nigeria’s offline funds financial system, constructed round the concept an unlimited agent community may convey monetary providers to prospects 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 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 charge additionally reached 34.8% in December 2024, based on 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 cost 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, based on 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’ cost behaviour started to alter as prompt 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) cost 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 can seek the advice of affected workers and assist them by 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 surroundings 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 might wind down its business amid a troublesome fundraising surroundings.
“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 development throughout its cross-border funds community and card issuing providers.
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