Africa fired up Exchangesfor Commodities

Capital market gurus from the African region have been in a fix as to whether the continent got its priority right by going for the development of stock exchanges ahead of the pursuit for commodity exchanges.

These mixed reactions greeted a thought-provoking delivery by Eleni Gabre Madhin, Chief Executive Officer (CEO) of the Ethiopian Commodities Exchange on the need for African economies to pursue the establishment of Commodities Exchanges to deal with the continent’s long standing poverty.

Speaking at the just ended Africa Regional Market Development Conference in Accra last week, Dr Gabre Madhin told delegates that included capital markets regulators and economic policy handlers from across the continent that, as agrarian economies, Africa has to pay more attention to the development of its entire agric chain.

The establishment of commodities exchanges, she noted, is the best modality to achieve that objective. She was speaking on the theme, ‘Developing a viable commodities market in Africa’,

Narrating the Ethiopian example, she explained that they understudied several other commodity exchanges such as the Indian Commodities Exchange, after which they settled on a model that was more suitable to the countries socio-economic conditions.

The influential CEO is on record to have vacated a lucrative job at the World Bank to work for the establishment of the commodities exchange in her home country. Through this initiative, Ethiopia has now been transformed into a net exporter of grains.

In his concluding remarks, Prof EVO Dankwa, Chairman of Ghana’s Securities and Exchange Commission, called on African economies to embrace the idea of creating domestic commodities exchanges.

“It is evident from the submissions that benefits to be derived from the commodities exchange will impact on a wider section of our population than that of the stock market”.

The establishment of a Commodities Exchange is expected to result in the streamlining of the entire food distribution chain, including storage and transportation.

Prof Dankwa told the Financial Intelligence (FI) that his outfit is working closely with government to establish a Commodities Exchange in Ghana.

The FI in an earlier publication reported that The Natural Resources Institute, the consultancy wing of Greenwich University in charge of the project, had submitted the final draft on rules and regulations for the commodities exchange to the securities regulator.


Prof Dankwa also called for a much more effective regulation on the continent to enhance confidence in the capital markets, and to enable regulators deal with crisis situations which are unavoidable.

He further cautioned against speculative excesses.

The Conference, which was organised by the Ghana SEC in collaboration with the US SEC, and the US Agency for International Development (USAID was under the theme, ‘Towards Effective Regulation and Development of an Efficient Market in Africa’.

The Conference sought to establish effective ways of strengthening the continent’s capital markets as a tool for resource mobilization in the wake of the global financial crisis, which is having serious constraints on several African countries.
By:Charles K. Amoah