The Securities and Exchange Commission (SEC) is to collaborate with the Nigeria Commodity Exchange (NCX) in a bid to make the Commodity market in Nigeria more vibrant. Mounir Gwarzo, acting director-general, SEC, gave this assurance when he received the management of the Exchange who visited him in Abuja.
NCX is formerly Abuja Securities and Commodity Exchange (ASCE) which has transformed into a commodity trading outfit. The Commission also assured the management of NCX of its support in its bid to get the NCX bill passed at the National Assembly and to do all within its capacity to get the commodity market on sound footing. Specifically, the acting DC disclosed that the Commission was ready to support NCX whenever there is public hearing on its bill at the NASS, but advised the management of NCX to do its networking very well before then.
Besides, Gwarzo also advised NCX to be well positioned for competition as there were other commodity exchanges, like AFEX that will soon be competing with it. Gwarzo said that SEC was very keen on the growth and development of the exchange largely because of its important role in the economy. “Migrating from being stock exchange to commodity exchange is a major feat and we are very excited about it. On our part, we will reach out to the Ministry of Finance so that we can make a case on some of the incentives that can encourage trading on the floor of the commodity exchange.”
“We are very confident of the success of the exchange as the prospects are very high but a lot of things need to happen and you need to do more in that regard.” He added that since circulars were issued to companies to ensure their shares are traded on the stock exchange, it made a lot of difference in market transactions in the secondary market. He assured that once the warehousing receipt system and all other things were in place in the commodity exchange, the Commission will collaborate in any other area to ensure a very active market. “But remember that the market is big as others are already coming in for registration. So you need to sit up” he said.
Speaking earlier, Zaheera Baba-Ami, acting managing director of the exchange, lamented the non-passage of the 2010 Warehouse Receipt Bill which she said is one of the issues hindering the growth of the exchange. Baba-Ami also advocated for incentives like excise and Export Duty rebate to encourage trading on the exchange. She appealed to SEC to assist in talking to end users and processors, like Nestle, Guinness, Cadbury etc, to purchase commodities via NCX to deepen the market. She noted that there was the need for proper legislation to regulate commodity trading in Nigeria and enhance liquidity and sustainability of the commodity exchange, adding that there was the need to compel companies to trade on the exchange, similar to what obtained in stock market.
According to her, adequate legislation has made Commodity exchange in Ethiopia to be ahead of others in Africa and made coffee a major foreign ex- change earner for that country. She however disclosed that the exchange with the assistance of the Central Bank of Nigeria (CBN) is rehabilitating 22 warehouses that will assist in storing grains so that they are readily available to meet demands of processors and increase activities of the exchange. This she said will ensure that farmers make more than the 30 per cent they presently make from their farm produce and assist in eliminating the issues relating to middle men in the agricultural chain. Baba-Ami lamented the absence of legislation to compel people to trade on the exchange, saying if adequate laws were put in place, it will go a long way in having a vibrant ex- change as well as serve as a buffer given the recent devaluation of the naira.