By Ayodeji Babatunde
Onafriq’s decision to discontinue its Baxi agent banking operations in Nigeria highlights the growing pressure on offline financial services as currency depreciation, rising operating costs and changing payment habits reshape the economics of the market.
The company, which operates the business through Baxi by Onafriq Nigeria Payments Limited, said it would wind down the operation following a review of its long-term strategy and the sustainability of the business.
Onafriq attributed the decision to significant changes in Nigeria’s operating environment, including inflation and the depreciation of the naira, which affected transaction volumes, operating expenses and the viability of its agent banking model.
The company entered the Nigerian agent banking market in 2021 through the acquisition of Baxi, also known as Capricorn Digital Limited. It subsequently invested heavily in expanding and strengthening the agent network through 2023, reflecting its confidence in the role of agent banking in improving financial inclusion and digitising cash-based transactions.
However, conditions changed considerably from 2024, forcing a reassessment of the business model.
According to the company, naira depreciation and wider macroeconomic pressures altered the economics of its strategy. At the same time, the rapid adoption of instant account-to-account payments changed the composition of transactions processed by agents through point-of-sale terminals.
Intensifying competition and declining margins added to the pressure, making it increasingly difficult to sustain the operation under the prevailing market conditions.
The decision underscores the challenges facing agent banking operators as they contend with rising costs and evolving consumer payment preferences. While physical agents remain an important channel for delivering financial services, operators must contend with changing transaction patterns and the commercial realities of maintaining extensive offline networks.
Dare Okoudjou, founder and chief executive officer of Onafriq, acknowledged that the company’s Nigerian investment had not delivered the expected outcome.
“We entered Nigeria with conviction and commitment, but did not achieve the outcome we set out for,” he said.
Okoudjou described the closure as a difficult decision, noting its implications for employees, agents and business partners who contributed to building the Baxi network.
He added that the company was committed to ensuring a fair and orderly transition for those affected by the decision.
Despite the withdrawal from agent banking, Onafriq stressed that it was not leaving Nigeria. The company said it would continue operating in the country as a Payment Solution Service Provider through its payments network and card-issuing services.
“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,” Okoudjou said.
The company also outlined transition arrangements for agents and employees affected by the closure.
Employees whose roles are tied to the agent banking business will be consulted and supported throughout the transition, with the company pledging to treat affected workers fairly.
Meanwhile, agents onboarded through the Baxi payments platform have been transitioned to another principal bank. Onafriq has asked agents to transfer their funds to their preferred principal bank within 30 days and said its teams would provide guidance and support during the process.
The company added that it would continue to honour its commitments to affected stakeholders and maintain open communication throughout the transition.
Onafriq said the decision was limited to its Nigerian agent banking operation and did not affect its wider business. The group maintained that it remained strong, with continued growth across its cross-border payments network and card-issuing services.
Its next phase in Nigeria will focus on strengthening the presence of these services within the local financial ecosystem, even as it exits the agent banking business that formed part of its market strategy for five years.
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