The Securities and Exchange Commission (SEC) with collaboration of major stakeholders on Thursday set out plans to revive the Nigeria commodity exchange market (NCX).
Complimentary to the diversification move of the Nigerian government, SEC stated that a moved like this is important in growing agriculture value chain in the country.
A commodities exchange is an exchange where various commodities and derivatives products are traded. Most commodity markets across the world trade in agricultural products, other raw materials and contracts based on them. These contracts can include spot prices, forwards, futures and options on futures.
Recommendations by the Technical Committee, TC, on Enhancing the Commodities Trading Eco-system, set up by SEC to recommend solutions to the many problems of the NCX showed that the planned restructuring would be in four phases with the first phase lasting for two years from 2018 to 2019.
The first phase, according to the report of the committee, will focus on achieving food/input sufficiency, price discovery and market development with special attention on agriculture produce like maize, sorghum, soya beans, cassava and rice.
This phase will also involve engagement in public enlightenment and development of education roadmap by the SEC as well as encouragement of investment in warehouses and storage facilities by both the Commission and private sector operators.
This phase will also involve organisation of farmers into cooperatives by the Central Bank of Nigeria, CBN, Federal Ministry of Agriculture and Rural Development, FMARD, and SEC to aggregate produce and encourage them to become members of the exchange among other relevant actions.
The second phase, which will last for another two years from 2020 to 2021, will focus on the development of export-focused commodities in agriculture like cocoa, sesame, cotton and palm oil, and continuous de-risking of agriculture value chain by the National Insurance Commission, NAICOM.
In the third phase (2022 – 2023), exchanges would be expected to key into Customs Single Window System to ease process of export.
During the fourth phase of the project (2024 – 2025), SEC and other stakeholders will ensure that there is strong international presence in the commodities market, while tradable commodities will be expanded to include solid minerals and energy.
More details available shortly…
