Key Takeaways
- Onafriq is discontinuing its Baxi agent banking business in Nigeria, operated by Onafriq Nigeria Payments Limited.
- The decision is attributed to high inflation, significant naira depreciation, and intensifying market competition.
- Economic pressures led to increased operating costs and reduced transaction volumes for agent banking.
- The rapid growth of instant account-to-account payments also altered the traditional role of PoS agents.
- Onafriq, which acquired Baxi in 2021, had invested heavily but found the business unsustainable from 2024.
- The closure impacts employees and agents, with Onafriq committing to support and a managed transition.
- Despite the agent banking exit, Onafriq affirms its continued presence in Nigeria through its payments network and card-issuing services.
Pan-African technology powerhouse, Onafriq, has announced the strategic decision to wind down its agent banking business in Nigeria. Operated under the well-known Baxi brand by Onafriq Nigeria Payments Limited, the move comes as a direct response to a confluence of severe economic challenges, including persistent inflation, the significant depreciation of the naira, and an increasingly competitive landscape within the financial services sector.
Economic Pressures Force Strategic Retreat
The company highlighted that the prevailing economic climate in Nigeria has created an untenable operating environment for its agent banking arm. Escalating inflation has driven up operational costs across the board, while the continuous depreciation of the naira has further eroded profitability and purchasing power. These factors collectively led to a noticeable decline in transaction volumes handled by its point-of-sale (PoS) agents, making the business model increasingly difficult to sustain.
Shifting Sands of Competition and Digital Payments
Beyond macroeconomic headwinds, Onafriq also pointed to a fundamental shift in Nigeria's payment ecosystem. The rapid proliferation and adoption of instant account-to-account payments have significantly altered consumer behaviour, reducing the reliance on traditional PoS agents for cash-in and cash-out services. This evolution has not only intensified competition but also squeezed profit margins for agent banking operations, further undermining their long-term viability.
Onafriq's Journey and a Difficult Decision
Onafriq initially entered Nigeria's vibrant agent banking market in 2021 through the strategic acquisition of Baxi, also known as Capricorn Digital Limited. Following the acquisition, the company made substantial investments throughout 2023, aiming to strengthen and expand its extensive agent network. This investment, as Onafriq stated, 'reflected the Group's belief in agent banking's role in expanding financial access and digitising cash-based transactions.'
However, the company observed a significant deterioration in trading conditions from 2024 onwards, prompting a comprehensive review of the operation's long-term strategy and sustainability. Dare Okoudjou, Founder and Chief Executive Officer of Onafriq, expressed the gravity of the situation, stating, '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.' He affirmed that while the company entered the market 'with conviction and commitment,' it ultimately did not achieve its expected results.
Impact on Employees and Agents
The planned closure will inevitably impact employees whose roles are directly linked to the agent banking business. Onafriq has committed to consulting each affected employee and providing comprehensive support throughout the transition period. Furthermore, agents who utilized the Baxi payments platform have been seamlessly transferred to another principal bank. The company has advised these agents to transfer their funds to a principal bank of their choice within 30 days, with Onafriq's teams available to provide guidance and support throughout this process. The company has pledged to honour all commitments to affected stakeholders and maintain open communication.
Nigeria Remains Central to Onafriq's Vision
Despite the significant decision to exit agent banking, Okoudjou emphasized that this move is limited to that specific business segment and does not signify Onafriq's withdrawal from the Nigerian market. 'Nigeria remains central to our mission, and we will continue to serve the market as a Payment Solution Service Provider through the Onafriq payments network and our card issuing services,' he stated. Onafriq will now pivot its focus towards integrating its core payments network and card-issuing services more deeply into Nigeria's dynamic financial ecosystem, reinforcing its commitment to the nation's digital transformation.
Why This Matters
Onafriq's withdrawal from Nigeria's agent banking sector underscores the intense pressures faced by businesses operating in challenging economic environments and highlights the rapid evolution of digital payment landscapes. This strategic pivot reflects a broader trend where companies must adapt or risk being outmanoeuvred, ultimately shaping the future of financial inclusion and digital commerce in one of Africa's largest economies.