Onafriq has revealed its plan to cease the agent banking operations of Baxi in Nigeria amid ongoing economic and market pressures. The Nigerian fintech firm attributed this move to the depreciation of the naira, escalating operational costs, and narrowing profit margins caused by intensified competition within the payments sector.
However, the company clarified that this withdrawal specifically concerns the Baxi agent banking unit under Onafriq Nigeria Payments Limited and does not represent an exit from the Nigerian market. Onafriq will maintain its cross-border payment network and card issuing services, continuing to serve customers through alternative channels.
Changing market dynamics challenge offline banking model
Since 2024, the operating environment for agent banking in Nigeria has shifted substantially, undermining the viability of Onafriq’s offline agent banking business model. Macroeconomic factors such as inflation and currency volatility have reduced transaction volumes and increased operating expenses.
Additionally, the rapid adoption of instant account-to-account transfers has altered the types of transactions processed by agents, diminishing their revenue potential. Meanwhile, rising competition in the payments market has exerted pressure on profit margins, making traditional agent banking less sustainable under the existing framework.
Implications for financial inclusion and market players
Agent banking has been instrumental in expanding financial services beyond physical bank branches across Nigeria, enhancing financial inclusion especially in underserved communities. Onafriq’s strategic retreat signals increasing challenges for businesses operating in this segment, highlighting the need for innovation and adaptation in payment solutions.
The company’s founder and CEO, Dare Okoudjou, emphasized that despite the contraction in agent banking, Nigeria remains a core focus for Onafriq. The firm intends to continue contributing to the local payments ecosystem through its ongoing services.
Context of international firms adjusting Nigerian operations
Onafriq’s decision aligns with a broader trend of international and domestic companies scaling back or altering operations in Nigeria due to economic headwinds such as currency instability, inflation, and challenges in repatriating earnings. Notable examples include Uber’s exit from Nigeria to concentrate efforts in markets with better return prospects.
This environment underscores increasing caution among foreign investors and highlights the complexities of operating in Nigeria’s dynamic but challenging financial services landscape.
Support for affected employees
Onafriq has pledged to consult with and fairly support employees whose roles are directly connected to the agent banking business during this transition, demonstrating a commitment to responsible workforce management amid operational changes.
Overall, Onafriq’s move reflects the evolving nature of Nigeria’s payments industry and the economic realities impacting fintech business models. It reinforces the importance of adaptive strategies as companies navigate fluctuating market conditions while striving to enhance access to financial services in Nigeria.
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