Onafriq, formerly known as MFS Africa and a digital payments network operating across 40 African countries, is winding down Baxi, its Nigerian agent banking business, after five years, following what the company describes as a review of its long-term strategy and sustainability.

In a statement issued on Friday, the company said inflation, naira depreciation, rising operating costs, lower trading volumes, margin pressure, and the rapid growth of instant account-to-account payments have made the offline agent banking business unsustainable.

Baxi was one of Onafriq's major bets on Nigeria's offline payments economy, built on the idea that a vast agent network could bring financial services to customers who still relied heavily on cash. Economic conditions, however, made maintaining that network increasingly difficult.

"We entered Nigeria with conviction and commitment, but did not achieve the outcome we set out for," said Dare Okoudjou, Onafriq's founder and chief executive officer. "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 said the decision will affect employees whose roles are tied to the, though it did not disclose the number of affected staff. The company said it will consult affected employees and support them through the transition, and will continue to honour its commitments to agents and other stakeholders as the business winds down.

Baxi agents have been transitioned to another principal bank and asked to move their funds to their preferred principal bank within 30 days, setting the timetable for the network's formal wind-down. Onafriq will continue operating in Nigeria as a Payment Solution Service Provider, focusing on its payments network and card issuing services.

"This decision is confined to the agent banking business in Nigeria and does not represent an exit from the Nigerian market," the company added in the statement. "Onafriq Group remains strong, with continued growth across its cross-border payments network and card issuing services."

Onafriq entered Nigerian agent banking by acquiring Capricorn Digital in a deal announced in October 2021. At the time, Baxi had more than 90,000 agents and had processed more than $1.6 billion in transactions in 2021. The acquisition was Onafriq's route into a payment market whose financial system remained heavily reliant on banks and cash.

The plan, according to the company, was to use Baxi's extensive physical distribution network to connect Nigeria's offline payments ecosystem to MFS Africa's cross-border payments infrastructure. Baxi's agents provided cash-in and cash-out services as well as account opening, money transfers, bill payments, and other services.

The macroeconomic backdrop weighed heavily on the business. In 2024, the naira lost roughly 129% of its value, falling to ₦1,479 per dollar, while Nigeria's inflation rate reached 34.8% in December 2024, according to the Central Bank of Nigeria (CBN). For a business with a large physical network, the depreciation and inflation meant operating inputs became more expensive.

Nigerians' payment behaviour also began to change as instant account-to-account transfers became more widespread. The volume of internet transfers in the first half of 2024 was 11.6 billion, compared with 6.3 billion for the point-of-sale (PoS) payment option, according to CBN data. At the same time, competition from fintechs including Moniepoint, OPay, and PalmPay grew, and these players came to dominate the PoS agent-banking market.

Onafriq's exit from agent banking comes amid a pullback by some fintechs from Nigeria's financial services market, squeezed by a tougher funding environment and rising operating costs. In May, Chimoney, a cross-border payments infrastructure company, ceased operations after struggling to raise enough capital to continue, while Gigbanc announced in July that it would wind down its business amid a difficult fundraising environment. From here, the wind-down is largely procedural: the 30-day window for agents to move their funds to a principal bank of their choice, consultations with employees whose roles are tied to the business, and the continued operation of Onafriq's payments network and card issuing services in Nigeria.