Industry calls for commodity exchange

HARARE – Zimbabwe’s business community has advised the government to resuscitate the country’s commodity exchange in a bid to boost agricultural production.

The country previously had a thriving commodity exchange, which was closed in 2001 when government gave the monopoly on corn and wheat trading to the Grain Marketing Board (GMB).

Efforts to revive the exchange have, however, met stiff resistance from government officials who have made it their mandate to ensure that it doesn’t see the light of day.

Industry experts say the commodity exchange will end the GMB monopoly as it creates a transparent, open and accessible commodities market where both buyers and sellers can participate knowing the prevailing prices.

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Also private investors would be able to acquire shares in the commodity exchange.

“The commodity exchange gives the government an opportunity to consider the adjustments and customisation of the market system which is price driven,” a multi-stakeholder team led by Confederation of Zimbabwe Industries president Sifelani Jabangwe said in a report.

“It also gives the government an opportunity to avoid pitfalls of monopoly practice through improved strategic, operational and regulatory frameworks.”

Commodity exchanges are part of a move to try to revitalise agricultural productivity in Africa and should be seen as part of a holistic solution, including agricultural extension, support infrastructure for small farmers including quality warehousing, and finance as well as market price information.

Other countries that have established thriving commodities exchange in Africa include Kenya, Malawi, Ethiopia, South Africa and Zambia among others

The multi-stakeholder team, which is working on developing a local content policy, said the exchange that has been on the cards since 2011 is earmarked to be managed by the State, banks and farmers’ unions.

“This would make Zimbabwean agriculture vibrant again as prices will drive production of certain crops and reduce pressure of government supporting agriculture year in and year out.

“The commodity exchange will help achieve local production in the economy with much government initiative as it will be restricted only to regulatory aspects,” the team said.

Meanwhile, the team said it is also crucial for the government to ensure that its special maize import substitution programme, Command Agriculture, is implemented in a sustainable way.

“For the scheme to be successful, sustainability issues should be considered through the concept of a revolving fund. This will enhance self-funding of farmers and grow the farmers’ numbers and hence increasing local production,” read part of the report.

This was after the International Monetary Fund had warned the government on the Command Agriculture programme, saying excessive public spending, if continued, could exacerbate cash scarcity, further jeopardise the financial sector and ultimately fuel inflation.

Command Agriculture was introduced in 2016, funded to the tune of $192 million by commodities firm Sakunda, in a bid to stop imports of the staple grain at a time when foreign currency shortages had intensified.

Comments (1)

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rajveervyas - 23 April 2018

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