The Nigeria Commodity Exchange has revealed plans to inaugurate an electronic warehouse receipt system on July 10, 2014.
The Managing Director of the Exchange, Mr. Yusuf Abdurrahman, said this in Lagos on Monday in company with the MD and Chief Executive Officer, Bank of Agriculture, Dr. Mohammed Santuraki; and the MD/CEO, Stanbic IBTC Bank, Mrs. Shola David-Borha.
The NCX, previously called Abuja Commodities and Securities Exchange, is collaborating with both banks, the Central Securities Clearing System Plc and the Federation of Agricultural Commodity Association of Nigeria on the project. Stanbic IBTC is the settlement bank.
Abdulrahman told journalists that the platform would give farmers the opportunity to keep their commodities in the NCX-accredited warehouses across the country.
He explained that the farmers would subsequently be issued electronic receipts about details such as commodity type and quantity as well as other relevant information.
He added that the depositor would be able to use the receipt as collateral to obtain bank loans or for trading on the Exchange.
“Another option is to keep such commodities in the warehouse until their prices stabilise or appreciate,” he said.
According to him, in addition to boosting liquidity, the system will encourage the provision of standard storage facilities for operators in the agricultural value chain and make the warehouse receipts a prime tool of trade while facilitating access to finance.
David-Borha explained that the initiative would also encourage participation on the Exchange, eventually giving it greater visibility.
She said, “The commodity exchange and the warehouse receipt system will be instrumental in opening up Nigeria’s farm produce to the global commodity market. The transparency it will engender is crucial in ensuring participation from across the world. And with transparency comes improvements in efficiency and pricing. It also makes it easier for banks to provide financing for operators in the agricultural value chain.”
She stressed that a major reason why the bank was participating in the project was because it considered agriculture to be ‘a very strategic sector’ for Nigeria.
“We are deploying our expertise and products towards the development of agriculture business in the country. Agriculture was hitherto seen as a subsistence activity but increasingly, more middle-level businesses and people are getting involved in it and we find that very encouraging,” David-Borha added.
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