Stakeholders speak on CBN’s N50bn commodity exchange, mop-up of produce

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Godwin Emefiele, CBN Governor.

By Gabriel Ewepu

The Central Bank of Nigeria, CBN, recently got an approval from the Federal Government to inject N50 billion into the commodity exchange to mop up produce from farmers and aggregators and sell through an application like the normal stock exchange.

CBN Governor Godwin Emefiele said despite huge gains made by the apex bank in the agriculture sector, there remained significant challenges, particularly within the Nigerian agricultural commodities value chain which needed to be tackled to accelerate investment and productivity.


According to him, some of those challenges include poor infrastructure and logistics which impede the movement of produce from farm to market and/or processing centres resulting in massive revenue losses to farmers; limited storage and preservation facilities; and lack of adequate liquidity to support off-take of agricultural goods.

The CBN boss argued that the critical role that an effective and efficient commodity exchange ecosystem should play in providing an organised platform for farmers to trade products in a transparent and efficient market cannot be under emphasised but lamented that the NCX, the Federal Government’s premier commodity exchange, set up in 2001, has failed to catalyse agricultural production.

He explained that the president also approved “the formation of a Steering Committee chaired by the CBN governor and including representatives from NSIA and AFC as well as the federal ministries responsible for finance, budget and national planning; industry, trade and investment, as well as agriculture and rural development, to oversee the implementation of this strategic plan”.

Stakeholders in agribusiness expressed their views about the N50 billion from the CBN to actualize its objectives in food production and sale that would benefit farmers.

The Chairman of Izevbuwa Farm Limited, Chief Partick Eholor, said, “The intervention from the Federal Government is a colossal initiative which will aid food production for the socioeconomic stability of the agribusiness.

“Kudos to the initiators, however, you and I know too well that this is not the first time the government are coming with such programmes in Nigeria. We have had a series of other programmes without results as a result of massive corruption on the side of the officials.

“Therefore, the Federal Government through the CBN should make sure they allow a transparent process of giving out the funds to genuine farmers through a thoroughly verifiable means.

“Secondly, there should be a level playing field for all – which is every geo-political zone should have equal access to the funds to add value to all sectors of our Agribusiness.

“All in all, it’s a welcome development if well managed. It will help bring out positive agricultural output thereby making all products available reducing the high level of demands on imported foods.

“With what I’ve equally learnt about other FG intervention programs, I’m sure this would make a positive impact if properly handled.

“Federal Government must not allow politicians and religious leaders to come close to it. A reputable financial institution should be given the responsibility to disburse the funds.”

Dr Victor Iyama, National President of Federation of Agricultural Commodities Association of Nigeria, (FACAN), said the initiative will go a long way to minimize post-harvest losses and boost production.

Adeola Adegoke, President of Cocoa Farmers Association of Nigeria (CFAN) in his view commended the CBN and its Governor, Godwin Emefiele on the initiative stating that it is a good step in the right direction in terms of preserving the identity of making sure that the nation has a functional commodity exchange like what farmers in Kenya are enjoying.

“When we look at that step and approval, we must commend the CBN and the Governor who has always been helping in terms of creating a kind of impetus to make sure that we grow the agriculture in Nigeria and to contribute immensely to the nation’s GDP.

Adegoke said commodity exchange has not lived up to expectations here in Nigeria.

“There is no doubt about that, we have a situation whereby the person that heads commodity exchange does know how much a measurement of rice is being sold in the market.

The National President, All Farmers Association of Nigeria, AFAN, Arc Kabir Ibrahim, said, “This is neither good economics nor sustainable Agribusiness. I do not think this is going to work at this point.

“There is already a hike in prices and any intervention such as being proposed is counterproductive as it will cause hyperinflation.

“If this is well thought out at the point of harvest when prices are low the farmers will get a good price and will therefore be able to readily go back to the farm the following season.”

The President, Association of Outsourcing Professionals of Nigeria, AOPN, Dr Madu Obiora, said, the CBN’s N50bn should be for creating a solid commodity ecosystem.

“On the N50 billion to be pumped into the commodity exchange to mop up produce and sold through an application, I do not understand this. Commodity exchange neither buys commodities nor deal on physical commodities.

“As described earlier, they are just a platform regulated by the Security and Exchange Commission where titles to existing commodities or commodities not yet harvested are traded. There is no functional commodity exchange in Nigeria as of today. There are three licensed commodity exchanges namely:

Abuja Securities and Commodity Exchange, ASCE, Abuja, Nigeria Agricultural products, Lagos Commodities and Futures Exchange, LCFE, Lagos, Nigeria Agricultural products, Oil and Gas, Currency, Solid Minerals, AFEX Commodities Exchange Limited, AFEX Nigeria Abuja, Nigeria Agricultural products.

“From the statement from Central Bank, it sounds like they want to bring back the commodity board. Mopping up commodities from the market is not the role of commodity exchange.

“What we have now is a market dominated by commodity traders who have their warehouses and a lot of funds. Not only do they understand the market, they know when to go in, buy up and retire and relax and control the market. There is hardly anything you can do to that commodity market segment in a free market.

“The Abuja exchange which is government-owned has been in existence for about two decades but not functional for reasons best known to the operators. A virile commodity exchange system will require a transparent price driven by a standards and grading system that assures the quality of the traded commodities.

“It will also require a legal and regulatory framework and a risk management system to thrive. Also, physical infrastructures like standard warehouses and an efficient transport and logistics system are crucial to the functionality of a commodity exchange system. Beyond all these, a highly knowledgeable and organized set of stakeholders will be required.

“My take is that the N50 billion should go towards funding the above requirements towards creating a solid commodity ecosystem not pumped into the government-owned commodity exchange. There should also be a level playing field between the government-owned and the privately owned commodity exchanges.

“There are several values that a commodity exchange system can add to the economy. Employment generation and improvement of living standard of the smallholder farmers as well as bringing financial inclusivity will improve the economy greatly.

“The attractiveness of agribusiness will be promoted by efficiently linking buyers and sellers via the commodity exchanges. Through grading and standardization of commodities, commodity exchanges will promote high standards of quality thereby boosting export and stem the current wave of rejection of Nigerian commodities as confidence is strengthened in the quality of commodities exported through the exchange.

“The use of warehousing system will help to ensure the continuous supply of Commodities regardless of the season. This guarantees raw materials for the industry at all times, reducing the risk of production disruption as well as storage and production.”

Also speaking, the Chairman, Safewater Energy and Environmental Restoration, SWEER Global, Dr Thaddeaus Thompson, said, “Nigeria’s Agro-industry cannot sustain itself nor a rapidly growing population without a parallel advancement in modern farming technology and methodologies commonly found in developed countries. The implementation of strategic plans without incorporating farming technology will be a repeated failure.

“Rather than farming with hoes and machetes, the younger generation will study farm management technology and resuscitate the ailing efforts of pumping cash into the wrong areas.

“It is as though farmers are being encouraged with large monetary incentives by successive administrations, yet most plans have omitted the importance of computerized farming needed to complete the supply chain.

“Farm management education, which includes storage management systems, no-code BPM Platforms with integrated workflow and rule engines could create a higher input, as it is the case in developed nations.

“Every Naira received by a struggling industry counts. The problem, however, is that most rural farmers do not know where to find these resources. Again, marketers are needed to bridge the gap between lenders and farmers, reestablish trust and reconnect farmers and customers to achieve the desired lasting result.”

The Director, Health of Mother Earth Foundation, HOMEF, Arc Nnimmo Bassey, said, “What we need is a mechanism that ensures that farmers get good returns for their labour. In order words, there should be a mechanism that assures farmers of an agreed basic price for their harvests.

“A system that promotes speculation, as the stock exchange does, could

end up benefiting the speculators to the detriment of the farmers. Investments should be aimed at boosting the capacity of small scale farmers to access resources needed for profitable farming.

“A huge chunk should go to providing infrastructure for transport and transformation of farm produce to ensure that the harvests don’t get wasted on the farms but reach those they need the foods and not merely financial speculators.

“The consideration should include verifiable farms, including their history. There should be a positive bias towards those producing wholesome foods devoid of dangerous chemicals and should be non-genetically engineered varieties. Farmers’ cooperatives should also have priority access.

“With 70-80 per cent of Nigerians engaged in farming and depending on it for their livelihoods, N50 billion is a token. For any financial outlay to be a game-changer in the agricultural sector it must be set in the context of the overall national budgetary allocation for the sector.

“This should be hinged on Nigeria meeting the benchmark set in the Maputo Protocol requiring nations to allocate a minimum of 10 per cent of their budget to agriculture.”

Vanguard News Nigeria

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