Operators decry slow take- off of commodities exchanges

OPERATORSHAVE attributed slow take- off of commodities exchanges in Nigeria to government’s lack of understanding of the workings of the specialised market, which thrives on trading electronic receipts as against the storage and sale of agricultural products in warehouses.

According to them, an organised commodities exchange with a clearing and settlement system, dealing with member firms and other registered operators has the potential to grow the country’s gross domestic product ( GDP) by revamping the ailing economy through employment generation and agricultural development.

They pointed out that commodities exchanges provide numerous benefits, especially to a developing economy like Nigeria, if the relevant authorities provide appropriate support for their efficiency.

A commodity trader and Chief Executive Officer, Wyoming Capital and Partners, Tajudeen Olayinka, said price discovery is a major driving force in the organised market. This, he said, refers to the mechanism through which prices come to reflect known information about the market. "The fact that farmers, merchants, commodity brokers, government and other stakeholders can reasonably gauge the mood of the market from publicly available information around demand and supply, makes planning, organising and forecasting easy.

“Nigerian economy will surely benefit from having functional commodity exchanges in the country and government must therefore align its economic diversification programme to commodity exchanges’ value chains to facilitate global trade and investments,” he said.

Another commodity trader and Chief Executive Officer, Sofunix Investment and Communications, Sola Oni, urged the Federal Government to remove any bureaucratic bottlenecks that may affect the smooth functioning of commodities exchanges to enable them to enhance economic growth and development.

He pointed out that the recent announcement of N50 billion lifeline for Nigeria Commodity Exchange ( NCX) by the Central Bank of Nigeria ( CBN) may have sent a wrong signal to the global community as it signals a conflict between the Securities and Exchange Commission ( SEC) and the apex bank on who regulates commodities exchanges in Nigeria.

"The Investment and Securities Act of 2007, among others empowers SEC to not only regulate commodities exchanges but ensure that all commodity exchanges compete effectively on a fair playing ground. There should be clarification on the roles of the regulator of commodities exchanges to enable the investing public to determine who to hold accountable for the delay in the effective takeoff of the exchanges in Nigeria.