Industry calls for commodity exchange 

Source: Industry calls for commodity exchange – DailyNews Live

John Kachembere      24 January 2018

HARARE – Zimbabwe’s business community has advised the government to
resuscitate the country’s commodity exchange in a bid to boost
agricultural production.

The country previously had a thriving commodity exchange, which was closed
in 2001 when government gave the monopoly on corn and wheat trading to the
Grain Marketing Board (GMB).

Efforts to revive the exchange have, however, met stiff resistance from
government officials who have made it their mandate to ensure that it
doesn’t see the light of day.

Industry experts say the commodity exchange will end the GMB monopoly as
it creates a transparent, open and accessible commodities market where
both buyers and sellers can participate knowing the prevailing prices.

Also private investors would be able to acquire shares in the commodity
exchange.

“The commodity exchange gives the government an opportunity to consider
the adjustments and customisation of the market system which is price
driven,” a multi-stakeholder team led by Confederation of Zimbabwe
Industries president Sifelani Jabangwe said in a report.

“It also gives the government an opportunity to avoid pitfalls of monopoly
practice through improved strategic, operational and regulatory
frameworks.”

Commodity exchanges are part of a move to try to revitalise agricultural
productivity in Africa and should be seen as part of a holistic solution,
including agricultural extension, support infrastructure for small farmers
including quality warehousing, and finance as well as market price
information.

Other countries that have established thriving commodities exchange in
Africa include Kenya, Malawi, Ethiopia, South Africa and Zambia among
others

The multi-stakeholder team, which is working on developing a local content
policy, said the exchange that has been on the cards since 2011 is
earmarked to be managed by the State, banks and farmers’ unions.

“This would make Zimbabwean agriculture vibrant again as prices will drive
production of certain crops and reduce pressure of government supporting
agriculture year in and year out.

“The commodity exchange will help achieve local production in the economy
with much government initiative as it will be restricted only to
regulatory aspects,” the team said.

Meanwhile, the team said it is also crucial for the government to ensure
that its special maize import substitution programme, Command Agriculture,
is implemented in a sustainable way.

“For the scheme to be successful, sustainability issues should be
considered through the concept of a revolving fund. This will enhance
self-funding of farmers and grow the farmers’ numbers and hence increasing
local production,” read part of the report.

This was after the International Monetary Fund had warned the government
on the Command Agriculture programme, saying excessive public spending, if
continued, could exacerbate cash scarcity, further jeopardise the
financial sector and ultimately fuel inflation.

Command Agriculture was introduced in 2016, funded to the tune of $192
million by commodities firm Sakunda, in a bid to stop imports of the
staple grain at a time when foreign currency shortages had intensified.