The International Finance Corporation (IFC), the World Bank’s private sector arm, has paused a proposed $50m debt package to Onafriq, a prominent pan-African payments aggregator, Launch Base Africa has learnt. The move comes amid broader concerns about currency volatility and economic headwinds across the continent.
The proposed financing, structured as a US dollar-denominated senior secured debt package, was intended to bolster Onafriq’s working capital, according to project documents seen by Launch Base Africa. 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.
Onafriq, established in 2021 and headquartered in London, has rapidly expanded across Africa through acquisitions and organic growth. Backed by a diverse group of institutional investors, including LUN Partners Group and AfricInvest FIVE, 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 $50m investment, comprising an A Loan and B1 Loan Participations, was intended to further fuel Onafriq’s growth. However, the project has been put on hold, although neither the IFC nor Onafriq have publicly commented on the reasons for the pause.
The decision comes at a time of increasing caution among investors in African fintech. While the sector has attracted significant funding in recent years, concerns about profitability, regulatory uncertainty, and the impact of macroeconomic pressures are mounting. Several African currencies have experienced sharp depreciations against the US dollar in recent years, making dollar-denominated debt more expensive for local businesses.
This currency volatility has become a significant factor in investment decisions, particularly for development finance institutions like the IFC. The organisation has increasingly 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 pursued 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 aims to provide over $1bn in local currency financing in the coming years.
The IFC’s focus on local currency lending is exemplified by its recent financing of Accra Medical Centre in Ghana. The healthcare provider secured a loan equivalent to $5.7m in Ghanaian cedis to avoid the risks associated with borrowing in US dollars.
While the company has demonstrated significant growth potential, the IFC’s decision suggests a reassessment of risk in the current macroeconomic environment.
The situation with Onafriq will be closely watched by other fintech companies across the continent. It may signal a shift in investor sentiment and further emphasise the need for businesses to adapt to the changing financial landscape.