ABDULWAHAB ISA 
After 20 years in dormancy, strategic intervention in the operation of the National Commodity Exchange (NCX) has breathed life into the hitherto ‘dead’ trading facility, ABDULWAHAB ISA reports
The importance of functional and supportive commodity exchange to agriculture can’t be divorced. Like twins, agriculture and commodity exchange complement each other. For a nation that prides itself as an agriculture nation, commodity exchange, a virile and well equipped one, is a must have. This wasn’t the case with Nigeria. Like equities exchange market, commodity exchange is an organised market for sellers and buyers of agricultural commodities. It’s an avenue; a platform for different types of investors willing to buy or sell commodities through fair price discovery. Commodity exchange is a platform to acquire and disseminate commodity news to help traders in making decisions.
Commodity exchange in focus
The National Commodity Exchange, previously known as Nigeria Commodity Exchange (NCX), was originally incorporated as a stock exchange on June 17, 1998. Located in the federal capital, Abuja, the exchange commenced electronic trading in securities in May 2001 and was converted to a commodity exchange on August 8, 2001 and brought under the supervision of the Federal Ministry of Commerce. The conversion was premised on the need for an alternative institutional arrangement to manage the effect of price fluctuations in the marketing of agricultural produce, which had adversely affected the earnings of farmers since the abolishment of commodity boards in 1986. The exchange will be of immense benefits to farmers, agro-commodity processors and merchants, as it will serve as a veritable platform for them to mitigate the inherent risks in agricultural production and marketing.
Past failed attempts
While a physical structure was in place as commodity exchange effectively 2001, in truth, there wasn’t any trading in agriculture produce done in the building. National Commodity Exchange was dormant with no activities. Yet, government was paying staff of the exchange. Bureaucracy, bottlenecks, inconsistency in government policies were part of the factors that led to the non-functional status of the exchange 23 years after its establishment. At some point, government toyed with the idea of privatising it, by bringing equity investors. The Bureau of Public Enterprises BPE) was given the task. The privatisation body was not only helpless on how best to chart an efficient path for a dormant exchange; each step taken by BPE ended in motion without movement. BPE accused NCX management of hoarding information it required to fast track the privatisation of the trading platform. There was another failed attempt. BPE enlisted the services of Nigeria Sovereign Investment Authority (NSIA) to overhaul the entire trading structure at the exchange. In taking the decision, BPE and NSIA agreed that a restructured trading platform at the exchange would give farmers awareness of what the global commodity prices were. They (farmers) would be incentivised to improve their production and prices become competitive. Regrettably, execution wasn’t forthcoming. There was unintended delay. A functional commodity exchange would have translated into food price moderation. This wasn’t the scenario in Nigeria. Prices of food items kept soaring each month the National Bureau of Statistics (NBS) released monthly food inflation data.
CBN’s rescue mission
No longer at ease with the foot dragging and slow pacing at the exchange, CBN Governor, Mr. Godwin Emefiele, announced historic declarations about the exchange at CBN’s 2021 maiden Monetary Policy Committee (MPC) meeting. The CBN governor lamented that previous efforts by the bank to contain spiral increase in food items via various funding interventions had been thwarted by Commodity dealers and middlemen in the agriculture value chain. These people, Emefiele said, were responsible for creation of artificial scarcity of food items. “We have found in the market the activities of private commodities exchange. Their activities have not helped our country, and it is time for the Nigeria Commodity Exchange to be repositioned, restructured to perform the role which by law it has been empowered to do.
“We have written to the president and luckily, we have received the approval to restructure and reposition the Nigeria commodity exchange. It will operate like standard commodity exchanges that you can find in any part of the world, which includes stabilizing of food prices generally. “We will be coming up with the agenda and framework for the restructuring and repositioning of the Nigeria commodity exchange and we will do so in a manner that prices must be stable in Nigeria. “We will not allow some selfseeking private exchange commodity to be holding agricultural products and be creating problems for prices because price stability is the cure mandate of CBN and we cannot shy away from the responsibility. “Luckily, CBN owns 60 per cent of Nigeria commodity exchange and we take control of it and will run it the way commodity exchanges are supposed to be run in any part of the world. That is one way that we would work to stabilize prices in Nigeria,” he said. A few days after Emefiele made the historic pronouncements about the exchange, he inaugurated members of the steering committee.
The bank committed to injecting N50 billion towards its revival while a directive was given to BPE to halt the sale process. The CBN governor charged the steering committee members of the Exchange, saying “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.” He lamented that “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 centers 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; Activities of middlemen who currently aggregate commodities with the sole aim of manipulating prices for selfish gains among others.” Emefiele said the above ills were core issues affecting Nigeria’s commodity market, which 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,” he said.
New beginning
The old management gave way to a reconstituted new management announced by CBN via a memo dated January 22, 2022. The new board is headed by Deputy Governor, Financial System Stability, Central Bank of Nigeria, (CBN), Mrs. Aishah Ahmad, as chairman. A statement by the Acting Head, Corporate Communications, NCX, Mr. Abiodun Sanusi, named Dr. Angela Sere-Ejembi, Director, Financial Markets Department, Economic Policy Directorate, and Mr. Philip Yila Yusuf, the Director, Development Finance Department as members of the board. CBN’s decisions were taken at an extraordinary general meeting held on Tuesday January 4, 2020. “The Nigeria Commodity Exchange (NCX) hereby informs the public in line with the provisions of the Companies and Allied Matters act (CAMA) 2020, an extraordinary general meeting of the NCX held January 4 2022 at which all shareholders unanimously approved the retirement of Directors and the appointment of three new Directors, Mrs Aisha N Ahmad, Dr. Angela Sere- Ejembi and Mr. Philip Yila Yusuf.” It further added that “Mrs. Ahmad was subsequently appointed chairman of the board at the inaugural board meeting, which also held on January 4, 2022. Additional board appointments will be made in due course.” It stated that the transition would be led by Mr. Elenwor Ihua, who would be acting as the interim coordinator until all the management positions are filled.
Last line
The apex bank’s intervention is the last push aimed at reviving a near comatose commodity exchange. Expectedly, a functional commodity exchange will translate to having moderate food prices and improve farmers’ fortune.
