CBN to Revamp Nigeria Commodity Exchange, Invests N50 Billion

Following the approval of President Muhammadu Buhari, the Central Bank of Nigeria (CBN) has concluded plan to invest N50 billion to revamp the ailing Nigeria Commodity Exchange (NCX).

CBN Governor, Godwin Emefiele who made the disclosure whil speaking at a meeting of critical stakeholders of the industry in Abuja  recently said the plan to invest N50 billion into the comatose Nigeria Commodity Exchange, NCX, is part of the government’s effort to diversify the economy and boost foreign exchange earnings.

He said the meeting was aimed at putting in place the enabling structures and Framework that would lead to repositioning of the Exchange “into a commercially viable Platform in Nigeria for delivering efficient pricing of Nigeria’s Agric produce; among others”.

Emefiele explained that the key objective of meeting “is to brief stakeholders on Mr. President’s recent approval of a proposal to reposition the Nigeria Commodity Exchange (NCX), and thereafter discuss the modalities for repositioning the institution”.

The Governor noted that the Federal Government along with the CBN, has implemented several intervention schemes in the agriculture and manufacturing sectors, aimed at boosting employment generation & wealth creation, reducing our dependence on imported food items, conserving our foreign exchange earnings, and spurring economic growth.

“These interventions in the agricultural sector, particularly the Anchor Borrowers’ Programme (ABP) and Commodity Development Initiative (CDI), sought to strengthen key agricultural commodities’ value chains, enable improved productivity in the agricultural sector, and increase sourcing of inputs locally by stakeholders in the manufacturing sector.

“These programs have also helped to improve our self-sufficiency in the production of key staple items, which is in line with the government food security objectives”, he said.

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The Governor however pointed out that despite the gains that have been achieved, “there are still significant challenges within the Nigerian agricultural commodities value chain that would need to be addressed, in order to accelerate investment and productivity in the sector”.

According to him, some of these challenges include; poor infrastructure and logistics which impede the movement of produce from farm to market and processing centers resulting in massive revenue losses to farmers.

He also listed limited storage and preservation facilities, lack of adequate liquidity to support offtake of agricultural goods, unavailability of pricing information to market participants and activities of middlemen who currently aggregate commodities with the sole aim of manipulating prices for selfish gains.

“These core issues that affect Nigeria’s commodity market must be addressed in order to properly harness the benefits that the agriculture sector could provide to our economy.

“There is no doubt that an effective and efficient commodity exchange ecosystem has a critical role in achieving the aforementioned objectives, through its provision of an organized platform for farmers to trade products in a transparent and efficient market”, Emefiele stated.

He regretted that the Government’s premier commodity exchange, has not been able to catalyze agricultural production due to several structural challenges which include, limited funding and investment, poor financial performance, deficiency in physical infrastructure and inadequate warehouse receipts and logistics infrastructure.

He however stated that the CBN has been engaging the management of Exchange and other key stakeholders on strategies to revamp the industry and upgrade its facilities, similar to what exists in other African and western countries “where commodities exchanges are a key drivers of economic growth”.

He said it was against this backdrop that Mr. President considered and approved a proposal, for the repositioning of Exchange in order to consolidate on the government’s efforts aimed at strengthening the agriculture value chain, part of which includes connecting farmers to markets beyond their immediate environments.

The Governor said in granting the approval, the President considered that the CBN, “as a majority shareholder of NCX, should collaborate with Nigeria Sovereign Investment Authority (NSIA) and Africa Finance Corporation (AFC), under the Infraco Structure, to develop and implement a strategic repositioning plan for the NCX to make the NCX an efficient world class Commodity exchange”.

The President he said also took into cognizance the formation of a Steering Committee (SteerCo) chaired by the CBN Governor and including representatives from NSIA and AFC as well as the Federal Ministries responsible for Finance, Budget & National Planning; Industry, Trade & Investment; and Agriculture & Rural Development, to oversee the implementation of this strategic plan.

“The revalidation of CBN’s 59.7% majority shareholding stake in NCX, to enable it implement far reaching measures, which includes reconstitution of NCX’s Board and Board Committees, appointment of Chairman by the CBN, and an investment of at least N50billion through the InfraCo structure.

“That CBN is expected to engage the Nigeria Postal Service on possible utilisation of its assets to develop model warehouses across the federation”, adding that “the SteerCo may co-opt any other Ministry, Department and Agency of government to see to the effective implementation of the Strategic Turnaround Plan”.