Pascal Arogorn Ibe
The Central Bank of Nigeria (CBN) and is to invest a fresh N50 billion in the Nigerian Commodity Exchange (NCX), Abuja.
The Governor of the CBN, Mr. Godwin Emefiele, disclosed this , Thursday at the Inaugural Meeting of the Steering Committee, set up to reposition the exchange.
He said that the investment would be made through the Infrastructure Corporation (Infraco) in collaboration with other investors such as the Nigeria Sovereign Wealth Authiority (NSIA) and the African Finance Corporation.
The move according to the CBN boss was to make the exchange functional in order to halt the arbitrage by middlemen, under whom Nigerian farmers have suffered for decades.
Mr. Emefiele also announced the approval of President Muhammadu Buhari to halt the on-going privatization of the Commodity Exchange, as the process was found to have become an obstacle rather than a solution to the problems of farmers, in accessing markets for their produce.
He revealed that the CBN has been engaging the management of NCX and other key stakeholders on strategies to revamp the Exchange and upgrade its facilities, similar to what exists in other African and western countries where commodities exchanges are a key drivers of economic growth.
“It is against this backdrop that Mr President considered and approved a proposal, for the repositioning of NCX, in order to consolidate on the government’s efforts aimed at strengthening the agriculture value chain, part of which includes connecting farmers to markets beyond their immediate environments” the governor said.
According to the governor, the highlights of the Presidential Approval were, “That CBN, as majority shareholder of NCX, should collaborate with Nigeria Sovereign Investment Authority (NSIA) and Africa Finance Corporation (AFC), under the Infraco Structure, to develop and implement a strategic repositioning plan for the NCX to make the NCX an efficient world class Commodity exchange.
“The revalidation of CBN’s 59.7% majority shareholding stake in NCX, to enable it implement far reaching measures, which includes reconstitution of NCX’s Board and Board Committees, appointment of Chairman by the CBN, and an investment of at least N50billion through the InfraCo structure.
“That CBN is expected to engage the Nigeria Postal Service on possible utilisation of its assets to develop model warehouses across the federation”
Mr. Emefiele said that the core issues that affect Nigeria’s commodity market must be addressed in order to properly harness the benefits that the agriculture sector could provide to the nation’s economy.
He added, “There is no doubt that an effective and efficient commodity exchange ecosystem has a critical role in achieving the aforementioned objectives, through its provision of an organized platform for farmers to trade products in a transparent and efficient market.”
NCX has remained largely inefficient due to a number of factors, including inadequate funding, poor financial performance, as well as, deficiency in physical infrastructure (warehouses, laboratories, grading capability).
Others were: inadequate warehouse receipts and logistics infrastructure, lack of broad legal framework and standards setting; and lack of supervisory clarity and overlapping supervisory mandates.
The Steering Committee is chaired by the CBN governor and includes representatives from NSIA and AFC, as well as, the Federal Ministries responsible for Finance, Budget & National Planning; Industry, Trade & Investment; and Agriculture & Rural Development.
The NCX was originally incorporated as a Stock Exchange on June 17, 1998. It commenced electronic trading in securities in May 2001 but was later converted to a Commodity Exchange on August 8, 2001 and brought under the supervision of the Federal Ministry of Commerce (now Ministry of Trade and Investment).
The re-launch of the repositioned NCX could take place in a matter of 90 day, if all necessary approvals are obtained within the period, according to Mr. Emefiele.
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