The inability of the Nigerian Government to put in place a legislative framework that will make it mandatory for agriculture produces exporters in the country to source their commodities from the Nigeria Commodity Exchange (NCX) platforms have been identified as the main obstacle hampering the effective implementation of the organized commodity trading in the country.
NCX is formerly known as Abuja Security and Commodity Exchange, a federal government established a market for sellers and buyers of agricultural commodities and solid mineral products are at the moment in the state of dormancy due to lack of legislative instrument to back up its operation.
The Exchange which was officially inaugurated in 2006, almost the same time with Ethiopia Commodity Exchange (ECX), has been inactive, despite having functional warehouses in seven states of the federation, as well as a multi-million naira automated trading platform in the commercial city of Kano.
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BusinessDay checks indicate that while the only major achievement of the NCX was the introduction of trading of electronic warehouse Receipt in commodities, such as cocoa, sesame, cashew, paddy rice, maize, sorghum, and soya beans, it Ethiopia counterpart traded 92,239 tons of Commodities worth ETB 4.6 Billion (Ethiopian Currency) in the month of January, this year (2020).
As a result of the lack of legislative back up, Nigeria which is one of the hubs of commodities cultivation in Sub-Saharan Africa (SSA), has continued to trade the bulk of the commodities being produced in the country, in the open market, which major Processors’, who are dominantly foreign firms leveraging to their advantage.
According to findings, several tons of locally produced commodities, namely: Maize, Sorghum, Millet, and Sesame, are daily been openly traded in markets, such as Wanke, Shinkafi, Kasuwar Daji, and Gada Maiwa which are situated in the Northwest state of Zamfara, one of the grains producing belts in northern Nigeria.
Commodities, such as soya bean, sunflower, maize, sorghum, millet, and sesame, could also be seen being openly traded informally in ADP Premises in the Northeast state of Bauchi, while commodities, like Rice, Cocoa, Maize, Cashew, and Serami Seed, are also been traded informally in states, such as; Ekiti, Kogi, and Ebonyi.
Commenting on the development, Sabiu H. Dalawa, zonal head, Kano office of NCX, confirms that lack of legislative the framework could be described as one of the major setbacks to the operations of the Exchange, and responsible for the unorganized nature of commodity trading in the country, generally.
Dalawa, however, disclosed that the development could be attributable to the fact that Nigeria operates a Liberal economy, and the Federal Government might not like to be involved in putting in place legislation that can be term anti-market.
But the NCX zonal head is of the view that such legislation will be very helpful, as it stimulates the operations of the Exchange, particularly, that of the Kano trading floor, which has remained inactive due to a lack of patronage by commodity dealers.
“I think a legislative framework that will make it very imperative for all exporters of agricultural commodities in the country to source their produces from the exchange will go a long in boosting the operations of NCX, and other privately owned Exchanges coming on stream across the country.
“It will also help boost the acceptance and quality of the commodities being exported from the country as the Exchange will ensure that only high graded commodities are accepted on its trading platforms”, Dalawa explained.
