Lack of trust affecting growth of commodity market, says Sterling Bank’s CEO
Chief Executive Officer (CEO) of Sterling Bank Plc, Abubakar Suleiman, has identified lack of trust as the main problem affecting the growth and development of the Nigerian commodity market.
He disclosed this while delivering a welcome address on a webinar organised recently as part of measures to promote SABEX, a digital commodity exchange empowered by blockchain technology. The webinar held with the theme: Agro Commodities as a Viable Asset Class.
SABEX, which was designed to facilitate the exchange of agro commodities, operates through an ecosystem of buyers, financiers, warehouse operators and other players in the agro commodity trading business across Nigeria. On SABEX, traders - typically farmers - can pledge their warehoused agricultural goods as collateral to access instant loans to facilitate their business growth.
Suleiman said the webinar had the objective of developing trust in the commodity market because there is currently no trust among players in the subsector, starting from farmers to micro players and exporters across the value chain.
He said there is a need to build trust in the payment, partnership, product, price and delivery elements of the agro commodity trading business. He added that “We need to financialise commodities to the point that they are similar to digital assets.”
The CEO said there is a need to get to the point of higher productivity by scaling and bringing efficiency and quality inputs into the agricultural produce space, adding that there is also the need to change the nature of the asset and increase the liquidity of commodities. He said SABEX intends to deliver on trust.
A Senior Fellow/associate Professor and full-time member of the Lagos Business School, Adedoyin Salami, who delivered the keynote address, noted that agriculture is a major sector that represents one-quarter of the Nigerian economy.
He noted that the commodity market is made up of energy, metals, agriculture, livestock and cryptocurrency.
Salami, who is also an Economist and Consultant, remarked that though the agricultural sector is declining, it still accounts for a significant proportion of jobs and has remained resilient over the years despite the ravaging effects of the Covid-19 pandemic, which saw Nigeria’s economy contract in two consecutive quarters of 2020.
The keynote speaker, who is also a member of the Nigerian Economic Summit Group (NESG) and Chairman of the Economic Advisory Council (EAC) of the Federal Government, said Nigerian commodities would compare favourably with all other asset classes, even though Nigeria is lagging behind other global players.
He said, from a global perspective, there is a huge potential for investments in physical assets in Nigeria, especially investments in storage and irrigation because the country’s agriculture is currently rain-fed and seasonal.
The university don explained that agriculture could also have a huge impact on the country through savings mobilisation, food security improvement, poverty reduction, increased financial inclusion, revenue diversification, and the complimentary role of regulators that would ensure transparency, capital adequacy, policy consistency, constant engagement with stakeholders, encouraging innovative products and revision of regulations to global best practice.
Ade Adefeko, Vice President, Corporate and Government Relations of Olam International, identified opaqueness, lack of trust, and transparency as some of the problems affecting the Nigerian commodity market.