Dare Okoudjou, founder and CEO of Onafriq. Image Credits: Rest of The World
The International Finance Corporation (IFC), the private sector arm of the World Bank, has halted a proposed $50 million debt package to Onafriq, a major Pan-African fintech. This decision comes off the back of economic instability and currency volatility surrounding the continent, a situation which has sparked concerns in the global market.
The proposed loan was structured as a US dollar denominated senior secured debt package. It was aimed at bolstering Onafriq’s working capital, according to the project documents released by the startup. Since its inception in 2021, Onafriq has rapidly spread across Africa through acquisitions and organic growth while its headquarters remained in London. Onafriq facilitates cross-border payments and remittances, connecting mobile money operators, banks, and businesses across more than 1,000 payment corridors and linking over 500m mobile wallets.
The company plays host to a diverse group of investors, including LUN Partners Group and AfricInvest FIVE. Through their backing, the company has positioned itself as a key player in Africa’s burgeoning digital payments landscape. In November 2021, Onafriq secured $100m in equity and debt financing to support its expansion, including the acquisition of Nigerian super-agent Baxi.
The IFC’s proposed $50 million investment was segmented into an A Loan and B1 Loan Participations, an investment designer to further drive Onafriq’s growth. However, the project has been paused, with neither the IFC nor Onafriq making any comments on the reasons for the pause.
This decision reflects increasing caution among investors in African fintech. While the fintech sector has attracted considerable funding in recent years, there are growing concerns about profitability, regulatory uncertainty, and the impact of macroeconomic pressures are mounting. A good number of African currencies have plummeted against the dollar. This has resulted in dollar-denominated debt being more expensive for local businesses.
This currency volatility has quickly become a major factor for investors to consider when making decisions. This is especially the case for development finance institutions like the IFC, which has continuously prioritised local currency lending to mitigate currency risks for borrowers.
“Demand for local currency financing is growing in Africa as it is the best strategy for many companies, especially those with local currency revenues, to protect their investments from currency risk,” Sérgio Pimenta, IFC’s Regional Vice President for Africa, said recently.
The IFC has actively forged partnerships with central banks across the continent to facilitate local currency lending. In 2024, it signed an agreement with the Central Bank of Nigeria to increase naira-denominated financing to private businesses. This initiative seeks to provide over $1bn in local currency financing in the coming years. Another evidence of the IFC’s focus on local currency lending is its recent financing of Accra Medical Centre in Ghana. The healthcare company secured a loan equivalent to $5.7m in Ghanaian cedis to avoid the risks associated with borrowing in US dollars.
