MARKET NEWS

Introduction

I am delighted to welcome you to this important meeting of critical stakeholders, which is aimed at putting in place the enabling structures and Framework   that would lead to repositioning of the Nigerian   Commodities Exchange into a commercially viable Platform in Nigeria for delivering efficient pricing of Nigeria’s Agriculture    produce among others.

In doing this, the key objective of this gathering today 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.

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As you all are aware, the Federal Government along with the Central Bank of Nigeria, 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.

Distinguished Ladies and Gentlemen, notwithstanding 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. Some of these challenges include;

Poor infrastructure and logistics which impede the movement of produce from farm to market and/or processing centres resulting in massive revenue losses to farmers; 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.

NCX Repositioning

As I highlighted in my earlier letter to you, the Nigerian Commodity Exchange (NCX), Federal Government’s premier commodity exchange, has not been able to catalyse agricultural production due to several structural and idiosyncratic challenges which include but  not limited to:

• Limited funding and investment
• Poor financial performance
• Deficiency in physical infrastructure (warehouses, laboratories, grading capability)
• Inadequate warehouse receipts and logistics infrastructure
• Lack of broad legal framework and standards setting
• Lack of supervisory clarity and overlapping supervisory mandates

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

It is against this backdrop that Mr President considered and approved a proposal, for the repositioning of NCX, 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.

Highlights of Presidential Approval

Following Mr. President’s approval, we would like to highlight some of the key measures noted in the approval:

That CBN, as 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 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.

The SteerCo may co-opt any other Ministry, Department and Agency of government to see to the effective implementation of the Strategic Turnaround Plan.

That the current plan to privatise the NCX be stopped forthwith given the unfortunate arbitrage opportunities which the government has noticed in the private sector arrangement; which has become an obstacle in moderating food prices in Nigeria.

Closing

The first task before us today is to discuss modalities for developing the Strategic Execution Plan for the repositioning of NCX, and in so doing deliver on the mandate given by Mr. President.

I count on your full co-operation and participation as we implement this transformational initiative that will unleash the vast potentials of Nigeria’s agricultural sector.

–Remarks by the Governor of Central Bank of Nigeria (CBN) Godwin Emefiele at inaugural meeting of the steering committee for the repositioning of the Nigeria Commodity Exchange (NCX)