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EDUCATIVE | BAKI
Inside Baki’s goal to enable infinite access to FX for African businesses
In Africa, where many countries rely heavily on imports, cross-border trade faces significant challenges due to weak currencies and complex financial systems. This results in slow and costly transactions, making access to foreign liquidity and currency swaps crucial for African businesses. Canza Finance, a Defi company founded in Africa, has addressed this issue with its innovative product, Baki .
Baki offers convenient access to foreign currencies at competitive market rates, enabling seamless transitions between native currencies and stablecoins. Built on Avalanche blockchain, Baki leverages the platform's low transaction fees and rapid transaction finality, making it a pioneer in establishing the first synthetic DeFi market for African stablecoins.
Despite the challenging funding climate, Canza Finance successfully concluded a $2.3 million strategic round to bolster the development of its decentralized financial technology. This funding aims to offer businesses more cost-effective access to foreign exchange (FX) rates and facilitate increased intra-African trade using Baki.Solving Africa’s FX liquidity crisis
The concept behind Baki was inspired by the demand from agents, individuals, and brokers for a reliable and equitable foreign exchange rate. This need is particularly pronounced in countries like Nigeria, where the disparity between the official import/export window rate and the parallel market rate poses challenges for stakeholders in the industry.
“When engaging with other stakeholders in this industry, rate negotiation is a constant feature, reflecting the embedded cultural practice in Nigeria and across Africa. However, transitioning to a different market revealed a lack of centralized information on prevailing rates or effective price discovery mechanisms, said Oyedeji Oluwoye, Co-founder and CTO of Canza Finance, in an interview with NODO. “Baki's inception was rooted in our extensive experience with OTC transactions and cross-border dealings. As we envisioned and built Baki, our aim was not just to focus on rate discussions, but to develop products that address real-world challenges we encounter firsthand.”
Hedging fast-depreciating currencies
The major currencies of African countries have experienced significant depreciation over the past year, with the Nigerian naira and the Ghanaian Cedi each losing half of their value. This instability has created an opportunity for the introduction of a stable rate to provide a hedge against fluctuating currencies.
“Our goal was to create a solution that fosters transparency and efficiency, utilizing the core tenets of Bitcoin and blockchain technology—such as oracles, data feeds, and messaging systems—to incorporate CBN rates and cater to global demands. In a world where business costs vary significantly while the outcome remains constant, relying solely on CBN and import/export window rates for data proves limiting,” Oluwoye said.
Since its launch six months ago, Baki has boasted a gross transaction value of $600,000, signaling a strong adoption rate among African traders and brokers.
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