Capital market stakeholders have known as for concerted efforts in the direction of establishing a purposeful commodities exchange in Nigeria, stating that this might support the non-oil sector to turn into a main export earner for the nation.
Commodities referred to as main merchandise, are uncooked supplies extracted from the earth under-going little or no manufacturing or refining course of. Commodities embody fuels, agricultural merchandise, minerals, ores, and metals, and are traded on the commodities market. Of the rising economies, nations in Africa have remained extremely depending on commodities.
The stakeholders argued that the transfer would enhance the advertising and marketing of commodity merchandise, main to improved earnings for operators in addition to income assortment by authorities.They regretted that the nation’s commodities exchange which may be very very important within the manufacturing of surplus and storage of agricultural commodities for trading on the exchange has not been ready to make the required impression since its institution in 2001.
Therefore, they implored the current administration to reposition nation’s commodities exchange to improve manufacturing of agro-commodities by farmers, employment era and contribute optimally to the nation’s GDP development.
The Managing Director and Chief Executive Officer (CEO) of the Nigerian Commodity Exchange, Mrs. Zaheera Baba-Ari, had final yr, lamented, “Currently, Nigeria Commodities Exchnage (NCX) is operating sub-optimally as the conversion from stock to commodity exchange was done without the required structural and institutional infrastructure.”
Baba-Ari mentioned the Exchange lacked satisfactory warehousing capability; satisfactory bodily infrastructure (communications, transportation); and applicable authorized and regulatory infrastructure when it comes to a system of grades and requirements, and a credible system of contract enforcement and governance in spot markets.
Other drawbacks of the NCX, in accordance to the CEO, are lack of supportive public insurance policies and institutional infrastructure equivalent to producers’ organisations as most African nations are characterised by smallholder farmers.
Specifically, The Managing Director of Crane Securities Limited, Mike Ezeh in an interview with The Guardian mentioned a purposeful commodities exchange would will additional strengthen the financial system and make it one of many best within the rising economies of the world.
“Commodities Exchange just like the inventory exchange can be an essential element of an financial system. Just just like the inventory market is the engine room of most economies the place it’s prevalent, it may be the engine room for these economies that would not have inventory markets.“But for Nigeria, with a vibrant inventory market in place, and an efficient commodity market added to the inventory market will additional make our financial system one of many best within the rising economies of the world.
He continued:”Our comodities and stable minerals that our nation is endowed with equivalent to gold, diamond, agric merchandise amongst others will entice the very best aggressive costs taking into account the truth that “Our commodities are world class when compared with that from other parts of the world. It will no longer be under priced or lying waste so you can see that the importance of a commodities exchange in an economy like Nigeria’s can not be overemphasized. It is long overdue.”
An unbiased investor, Amaechi Egbo who lamented that that the nation’s commodities exchange has not made the required impression since its institution in 2001, famous that such exchange in different rising markets has helped to improve liquidity in addition to improve market capitalisation of their numerous jurisdictions.
As acknowledged by Egbo, a sturdy and vibrant commodities exchange would support the non-oil sector to turn into a main export earner for the nation.He also stated that it could additionally enhance the advertising and marketing of commodity merchandise, main to improved earnings for operators in addition to income assortment by authorities.“Farmers will see value for the business, cultivate more and then create wealth for themselves, for government and for the entire nation which will lead to the growth in GDP.”
The Chief Operating Officer of InvestData Consulting Limited, Ambrose Omordion mentioned: “In jurisdictions where commodity trading is conducted via privately established commodities exchanges, trading volumes are impressive.”Citing South Africa, he identified that the South African Futures Exchange (SAFEX) trades nicely over a hundred thousand contracts a month since 2001.He famous that the exchange was purchased out by the Johannesburg Stock Exchange in 2001, saying this has positioned the exchange because the continent’s largest commodity exchange.He also stated that from all indications, it’s clear that the privatisation of the NCX is overdue if trading capability in commodities is to enhance in Nigeria.