President Muhammadu Buhari has approved an investment of N50 billion (about $126m) in Nigeria Commodity Exchange (NCX) as part of efforts to reposition it.
The Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele, who announced the investment decision at the inaugural meeting of the Steering Committee (SteerCo) for the repositioning of the NCX on Thursday in Abuja, stated that the federal government has also suspended, with immediate effect, the current plan to privatise the exchange.
He added that the decision to suspend the privatisation followed what he described as the unfortunate arbitrage opportunities which the government had noticed in the private sector arrangement, which had become an obstacle in moderating food prices.
According to him, the president has also approved a proposal for the repositioning of the exchange 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.
Emefiele, who chairs the SteerCo, said the federal government’s premier commodity exchange had not been able to catalyse agricultural production due to structural and idiosyncratic challenges.
He identified the bottlenecks to include limited funding and investment, poor financial performance, deficiency in physical infrastructure (warehouses, laboratories, grading capability), inadequate warehouse receipts and logistics infrastructure.
Others included a lack of broad legal framework and standards-setting as well as lack of supervisory clarity and overlapping supervisory mandates, among others.
According to him, the formation of the SteerCo also included representatives from Nigeria Sovereign Investment Authority (NSIA); Africa Finance Corporation (AFC); Ministry of Budget and National Planning; Ministry of Industry, Trade and Investment; and Ministry of Agriculture and Rural Development to oversee the implementation of the strategic plan.
Emefiele, who explained that no timeframe had yet been set for the assignment, added that pending approvals, the first launch involving approvals on repositioning, restructuring, setting up various board structures, board committees and governance committees should happen within 90 days.
Providing more insights into Buhari’s approval for the planned reforms in the NCX, the CBN governor said as majority shareholder of the exchange, the apex bank would collaborate with NSIA and AFC under the Infraco structure, to develop and implement a strategic repositioning plan for the NCX to make it an efficient world-class commodity exchange.
Under the proposal, the 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.
Emefiele said when completed, the repositioning drive will open up Nigeria’s agricultural sector and bring succour to Nigerian farmers who have suffered in the hands of “people who are arbitraging, people who take their products for peanuts and then sell and make lots of money.”
He said: “We believe this would stop by the time this happens and we can on the part of the government see to it that we are able to moderate prices in the way that it is good for our economy.”
Emefiele also said the federal government alongside the CBN had implemented intervention schemes in the agriculture and manufacturing sectors, aimed at boosting employment generation and wealth creation, reducing dependence on imported food items, conserving foreign exchange earnings, and spurring economic growth.
He stated that the interventions in agriculture, 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 the sourcing of inputs locally by stakeholders in the manufacturing sector.
He explained that the programmes also helped to improve self-sufficiency in the production of key staple items in line with the government food security objectives.
Emefiele said notwithstanding the gains achieved, there are still challenges within the Nigerian agricultural commodities value chain that would need to be addressed, in order to accelerate investment and productivity in the sector.
He listed poor infrastructure and logistics as impediments to the movement of produce from farm to market and/or processing centres resulting in massive revenue losses to farmers.
He also identified other challenges to include limited storage and preservation facilities, lack of adequate liquidity to support offtake of agricultural goods, unavailability of pricing information to market participants as well as activities of middlemen who currently aggregate commodities with the sole aim of manipulating prices for selfish gains.
He said 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.
He stated that an effective and efficient commodity exchange ecosystem remained critical in achieving the aforementioned objectives, through its provision of an organised platform for farmers to trade products in a transparent and efficient market.