‘Commodity exchange will impact on real sector, deepen capital market’

Uzoma Nkem-Abonta, (PDP-Abia) chairman, House Committee on Public Petitions, in this interview with select Legislative Correspondents including   KEHINDE AKINTOLA, spoke on the capability of the agricultural sector to reduce unemployment rate by 5 million, bill of Commodities Future Trading in Nigeria and other sundry issues. Excerpts:

Commodity Exchange is basically agricultural. It is a commission where agricultural products and other derivatives will be traded upon. It is a platform through which agricultural produce could be effectively harnessed and enacted, where it can improve the input and export orientation for export promotions, we can’t do without those Exchange Commissions. Just like you have Investment Commission, security commission, etc so Commodity Exchange will be a platform for agricultural exchange mainly and other derivatives can be treated upon. In fact, it is so wide and huge that if we are talking about alternative revenue then we must deal with agriculture proper and in dealing with agriculture we must talk about Commodity Exchange. I will make a list of countries worldwide that make use of Commodity Exchange to survive. I will give you an example, Obasanjo introduced cassava initiative and today, Nigeria is the largest producer of cassava but we are not the largest marketers or exporters of cassava because we don’t have a platform through which you can market this, yet cassava is used; it is the best raw material for animal feed all over the world. Yet we can’t export it and produce it in a large capacity, we can’t market it outside, but if we had Commodity Exchange Commission, it will be easier to have commodity brokers, warehousing, invoicing whereby farmers will be very assured that they have a platform to serve. Let me also give an example, if I produce corn or millet through Commodity Exchange Commission, I will be guaranteed that for 1 million tons of corn produced, there will be a market to pick it then, the man who produces or manufactures cornflakes, custard and all that will also be guaranteed that if he brings $1 million, all things being equal and through the help of God at a particular day, he will get delivery of the value of worth of corn he will provide the fund. It will also bring you financing and so on and the Commodity Exchange will guarantee that the farmer will sell when he produces and the buyer will see to buy when he is seeking and the middle man will also make money when it comes to warehousing. If you also produce corn or cassava and you don’t even have money, you put it in a warehouse and the warehouse gives you an invoice saying this is what you have, with that invoice you can go to a bank and the bank will discount it like let’s say 70 percent or whatever. Since you have the goods in the warehouse worth N10 million any bank can come and give you N7 million on presentation of that invoice which is like a Promissory Note or instrument then you can now also raise funds knowing that the goods in the warehouse serve as a collateral and will eventually be sold. In America they do it that is why if you order for 1 million ship load of rice today they deliver to you in America because they have an efficient warehousing system.
So in Nigeria, if Buhari wants to succeed, I will rather suggest that he should shift his attention and energy because we need to be alive to catch the thieves, but should direct some of these energies on those that are not stealing so that they will survive. Like I said, the rich can’t sleep because the poor are awake and the poor can’t sleep because they are hungry. The government should try and provide sufficient food for everybody and therefore I say that one of the things we must do is to put a revolution in agriculture and that revolution will be by producing these products.

Commodity Exchange will not only increase our economy but it will also increase our naira to compete with dollar. It also increases the opportunity to diversify our revenue earning by ensuring food security which is very important. It also increases industrial activities through provision of raw materials, eradicating poverty of course and unemployment.
Everybody wants to work in Villa, Aso Rock, National Assembly; the richest men in America are they not farmers? So why won’t we farm here, can’t we encourage the youth to farm? If you have a decent platform where they can market their produce why won’t they farm? We need to have what they call Green Revolution started by Obasanjo, one of the cardinal principles I must advise Buhari to adopt is agricultural revolution; schools must farm, young graduates  must be encouraged to farm since government has made a U-turn on the N5,000 stipend. I also support him to do away with it because it was a bogus and deceitful promise. I knew they couldn’t retain it and Nigeria should be made a beggar nation. Let him group these unemployed people and channel this fund to do farming and through the exchange commission and the broker take their produce rather than giving unemployed youths N5,000 a month, sum the aggregate and give them N200,000 in a year and give them farm and equipment, and provide the start up pack for them. For example like providing things like tractors, housing and all that, it will surprise you to know that the number of tractors in Nigeria is not up to the number in a state in India, Malaysia or Pakistan.

When I talked about the process, I said it will lead to increased industrial activities through available raw materials the commodity exchange will now give you a standard that you can now trade on. For example, in SEC it must be stated that for us to market cocoa, the quality must be this and the quantity must be this and if I know the industry to get the content to be sold I will invest on it. So, the Commodity Commission will set the standard for what you can export; investors will now go into it knowing that if it meets that standard it must be sold.

We can process the cocoa itself, manufacture the chocolate itself if we have the capacity but now I don’t know and I won’t go into it; let us not sell the chocolate and manufacturing of chocolate ourselves that may be our second phase. By the time we start producing cocoa enough and processing then chocolate companies may come down and the only way you can make these chocolate companies come down to Nigeria to manufacture is to produce good cocoa with good quality, make it expensive because they don’t want to buy it at that dollar rate; then they will be forced to come down to invest but when they are getting peanut from you why will they come down to invest? Why would they come and manufacture cocoa here, they will go and do it outside. Cadbury for example can’t do without cocoa, they came to site here because they found good cocoa in abundance but if you make your cocoa expensive by creating good quality of cocoa and saying I will sell that so and so price the chocolate companies will come to Nigeria to begin to invest. It is just like motor business, nobody will come to manufacture motor here as long as you keep dumping ‘tokunbo’ here; nobody will come.

When you talk about funding and policy I will make bold to tell you that this year’s budget is a mess. It is a budget of change, change in the sense that it brought in a lot of confusion but I now know that President Buhari must have learnt his lesson and will personally appoint people who will supervise budgeting. I thank God the legislature is a budget-writing legislature and by next year I don’t think he would want to get stuck by this system, he will now budget according to his needs. We have needs to budget in, a sufficient need which is agriculture. So if we can diversify from oil then we must fund the area we want that thing to come from. It is like your input values your output so you can’t put in peanut and think monkeys will not harvest for you, when your input is peanut your harvesters become monkeys. We need to work on agriculture very well and identify the areas, the blueprint, so what we need to do is not just to say fund agriculture and produce but after production what else? You must plan for production, for warehousing, for preservation. For example we produce a large quantity of tomatoes during tomato season a basket you can get for a little amount after the season you don’t get tomatoes again, during the harvest period what do we do with these tomatoes? Can preserve them, can we refrigerate them, can we turn them to pudding to have enough when their season is over? Mango for example, you see mango is sold 20 for 10 kobo at the season, after mango season no mango anymore; can we turn them to dust so that when you mix water you can now have mango juice?

Yes, Abuja Commodity Exchange which is now changed to Nigeria commodity exchange also have branches all over, they have platforms in the north and so on and they also want to go to geo-political zones. For example, Enugu, Port Harcourt, Kaduna are going into production. If you are talking about palm oil you must go down to the east and so on but gradually we will now get all the states so that the people will not travel far to market. They also have centres and warehouses that are maintained and built to standard. Right now, the commodity exchange has the capacity, they have the personnel but they are not funded. They can hardly pay rent for where they are not to talk of having their own property. They need to have secured environment, capacity building for their staff. The lady who is there now knows what to do but she needs appropriate funding and I am praying that Buhari gives her appropriate attention and funding and see what she is going to do.