Nigeria’s Shift from Cash-Out Agents to Instant Phone Transfers, and a Tougher Climate for Fintech Funding
Here is the paradox at the heart of Nigeria’s payments story: the more Nigerians embrace digital money, the harder it becomes to run the cash networks that helped bring them into the financial system. Agent banking, a network of local shops and kiosks offering cash withdrawals, deposits and transfers, was built on the idea that a vast physical network could bring financial services to customers who still relied heavily on cash. Now one of its larger operators is leaving the business. Onafriq, a digital payments network that operates across 40 African countries, said in a statement on Friday that it is winding down Baxi, its Nigerian agent-banking business, after five years, following a review of its long-term strategy and sustainability.
The company’s list of reasons reads like a summary of Nigeria’s recent economic conditions. Inflation, the depreciation of the naira, rising operating costs, lower trading volumes, margin pressure and the rapid growth of instant account-to-account payments, it said, had made the offline agent-banking business unsustainable. “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. “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.”
A Large Bet on Cash
Onafriq entered agent banking in Nigeria 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. Its agents offered cash-in and cash-out services, account opening, money transfers, and bill payments. The plan, according to the company, was to use that physical distribution network to connect Nigeria’s offline payments economy to MFS Africa’s cross-border payments infrastructure. It was a logical bet for a market whose financial system still leaned heavily on banks and cash.
The economics then turned against it. In 2024, the naira fell to about ₦1,479 to the dollar, and inflation reached 34.8 percent in December 2024. For a business that depends on thousands of physical outlets, a weaker currency and rising prices push up the cost of almost everything it needs to operate, while squeezing the fees that customers can bear.
The Phone Overtook the Kiosk
The deeper shift was in how Nigerians pay. As instant account-to-account transfers spread, the volume of internet transfers in the first half of 2024 reached 11.6 billion, compared with 6.3 billion transactions through point-of-sale terminals. Customers who once walked to an agent to send money increasingly do it from their phones. At the same time, competition intensified: fintechs including Moniepoint, OPay and PalmPay grew to dominate the point-of-sale agent-banking market. Baxi was caught between a shrinking need for cash services and rivals with greater scale in what remained.
Onafriq is careful to say that it is not leaving Nigeria. “This decision is confined to the agent banking business in Nigeria and does not represent an exit from the Nigerian market,” the company said, adding that the group remains strong, with continued growth in its cross-border payments network and card issuing. It will keep operating in Nigeria as a Payment Solution Service Provider focused on those two lines.
Who Bears the Cost
The closure has human consequences. Onafriq said employees whose roles are tied to the business will be affected but did not disclose how many, and it said it would consult them and support them through the transition. Baxi’s agents have been moved to another principal bank and asked to transfer their funds to a principal bank of their choice within 30 days. For small shopkeepers whose income partly depends on agent commissions, that deadline is a practical test of how smoothly the wind-down is handled.
The decision also fits a wider pattern. Some fintechs have pulled back from Nigeria’s financial services market, squeezed by a tougher funding environment and rising operating costs. In May, the cross-border payments company Chimoney ceased operations after struggling to raise enough capital, and in July Gigbanc announced that it would wind down its business amid a difficult fundraising climate. Baxi’s closure is a strategic retreat rather than a collapse, but it comes from the same pressures.
Inclusion Depends on Who Owns the Rails
Agent networks did real work in widening access to financial services, and the rise of instant transfers is in many ways a success of that inclusion. But the Baxi story is currency swings, foreign capital and a few dominant platforms shape a reminder that the infrastructure Nigerians use to move money. Policymakers who want inclusion to last should watch where the customers who still depend on cash will now go, and make sure that the consolidation of the market does not leave them behind. Economic self-determination in payments is less about which brand wins and more about whether every Nigerian can still reach a reliable, affordable way to pay and be paid.
