• Sunday, July 14, 2024
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Boost seen for agric sector as CBN to inject N50bn into Commodity Exchange

agric sector

Following a presidential approval, the Central Bank of Nigeria (CBN), is to inject some N50 billion into the Nigerian Commodity Exchange (NCX) and revamp it into an efficient world-class institution.

President Muhammadu Buhari had approved that the CBN, as a majority shareholder of NCX, should collaborate with the Nigeria Sovereign Investment Authority (NSIA) and Africa Finance Corporation (AFC), under the Infraco Structure, to develop and implement a strategic repositioning plan for the Exchange which has remained comatose for several years.

At an inaugural meeting of the steering committee on this task, Thursday in Abuja, Godwin Emefiele, CBN governor, 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, in order to accelerate investment and productivity.

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.

Other challenges include; the unavailability of pricing information to market participants; as well as activities of middlemen who currently aggregate commodities with the sole aim of manipulating prices for selfish gains.

At the event, Emefiele noted the critical role that an effective and efficient commodity exchange ecosystem should play in providing an organized platform for farmers to trade products in a transparent and efficient market, but regretted the NCX, the Federal Government’s premier commodity exchange, set up since 2001, has failed to catalyze agricultural production.

This, according to him, has been due to several structural and idiosyncratic challenges including: limited funding and investment; poor financial performance; poor infrastructure; lack of broad legal framework and standards setting; lack of supervisory clarity and overlapping supervisory mandates, among others.

The president also approved, “The formation of a Steering Committee (SteerCo) 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

“The revalidation of CBN’s 59.7 percent majority shareholding in NCX, to enable it implement far reaching measures, which include reconstitution of NCX’s board and board committees, appointment of chairman by the CBN, and an investment of at least N50 billion through the InfraCo structure.

The CBN is also expected to engage the Nigeria Postal Service on possible utilisation of its assets to develop model warehouses across the federation.

“The SteerCo may co-opt any other ministry, department and agency of government to see to the effective implementation of the strategic turnaround plan.

The president further directed that the current plan to privatise the NCX be halted given the unfortunate arbitrage opportunities which the government has noticed in the private sector arrangement; which has become an obstacle in moderating food prices in Nigeria.