Prez Mahama Launches Commodity Exchange In Accra

The President, Mr John Dramani Mahama, yesterday launched the Ghana Commodity Exchange (GCX) in Accra, with an assurance that the government had the political will to see to its successful implementation.

"There is sufficient political will to see the commodity exchange through. I am confident that by the middle of next year, Ghana will have a full and well-functioning commodity exchange," he said.

Financed with minority equity investment from the government of Ghana and a private sector financing consortium, the GCX project will be implemented by the recognised industry leader in establishing and operating commodity exchanges in frontier markets.

The investment consortium partners include Ecobank Ghana Ltd, UT Bank, the International Finance Corporation (IFC), 8 Miles Fund (a London-based private equity fund ) and eleni LLC.

The launch was the culmination of months of research, discussions, evaluation and other preparatory works.
Commodity exchange

A commodity exchange is an organised market where future delivery contracts for graded commodities such as grains, cotton, sugar, coffee and wool are bought and sold.

The GCX, which would operate on a warehouse receipt system modelled after a similar one in Ethiopia, is expected to begin operations in 2016.

The initiative will be a multi-commodity exchange that provides market integrity.

It is aimed at transforming Ghana’s agriculture through creating a transparent and professional market institution.

The GCX will start trading of primarily agricultural commodities, including maize, soybeans, groundnuts, paddy, palm oil, among others, and is expected to introduce other key agricultural and non-agricultural commodities in what is envisaged as a future regional trading platform.

Eight marketing centres have been established in the country to begin the trading.

The launch brought together stakeholders in the agricultural, trade, financial and business sectors who were sensitised to the GCX design and its benefits.
Expectations

President Mahama said the launch marked a significant stage in the development of the agricultural value chain.

He expressed the hope that the system would create an orderly, transparent and efficient marketing system for Ghana's key agricultural commodities to promote agricultural investment and enhance productivity.

"This will encourage access and fair returns for, especially, smallholder farmers and formalise agricultural trading activities," he said.

Besides, he said the system would accelerate the pace of the country's transformation agenda and move Ghana from an import economy to an export-driven one.

The President expressed satisfaction with private sector involvement in the development of the model for the exchange and said he looked forward to its development as the hub of commodity exchange in West Africa.
Shift

He said the time had come for a shift from subsistence agriculture to market-oriented agricultural production.

That would, however, require the emergence of a lower cost and lower risk marketing system that would allow many actors to participate in the process, he added.

President Mahama said the Cabinet had approved a consolidated security industries bill to prepare the ground from the legal framework that would allow the Securities and Exchanges Commission to, among other things, regulate commodities and exchanges and warehouse receipt systems in the country.
Spio-Garbrah

For his part, the Minister of Trade and Industry, Dr Ekwow Spio-Garbrah, said the initiative would ensure that farmers got the full measure of their investment.

He added that the GCX would engage broad participation by small-scale producers, commercial growers, domestic traders, agro-processing industries, commodity exporters, the national buffer stock administration, food aid agencies and other institutional buyers.

That, he said, would have a huge potential to improve the functioning of agriculture by enhancing price transparency, leading to increased farm output and incomes.

While urging financial institutions to invest the necessary percentage in the agro-sector to boost the economy, Dr Spio-Garbrah advised the public to make the effort to enable the GCX to serve as a significant landmark to impact adequately on the agricultural and trade industry.

The Minister of Food and Agriculture, Mr Fiifi Fiavi Kwetey, expressed optimism that the initiative would help farmers appreciate proper documentation of trading activities and contracts.

The Chief Executive Officer of eleni LLC, Dr Eleni Gabre-Madhin, said Ghana’s exchange had every potential to become a leading West African hub for globally traded commodities.

Source: Daily Graphic