The Nigeria Commodity Exchange (NCX) says lack of sufficient funding and requisite support from the authorities are militating against the effort to achieve optimal performance of its statutory functions.
Mr Chris Echikwu, Head, Corporate Communications and Strategy, gave the reasopn while speaking with the News Agency of Nigeria (NAN) on Monday in Abuja.
He said that the exchange had not been privatised, as was popularly believed, and was still fully funded by the Federal Government.
He, however, added that the Nigeria Sovereign Investment Authority (NSIA) was interested in buying into the exchange.
Echikwu said that the exchange was in the process of setting up infrastructure, to enable better operation but had not been able to do so successfully.
“We are trying to set up our infrastructure which has been lacking and is the reason for our inability to do much over the years.
“A structure like this that is novel in the Nigerian economy would naturally need intense publicity and enlightenment.
“If we must do something for it to be accepted by the public, we need to enlighten them about it even as we are setting it up.
“However, we do not have the level of funding support to carry out the level of publicity and public enlightenment it requires.”
He also said that the beneficiaries of the exchange (buyers and sellers of agro commodities) had not been fully engaged, also because of lack of requisite support and funding.
He said there was the need to establish warehouses, which was the basic architecture of the exchange.
He said the warehouses were important to efficiently and safely sell the commodities brought to the exchange, to take full possession of them.
“For example, if someone brings 30 tonnes of maize to the exchange for sale and it is still in his warehouse and has agreed that it be traded on the exchange for N10,000 per tonne and the transaction was concluded.
“If by evening it rises to N10,100 in the open market, his instincts will be to not want to sell and because it is in his possession it will be hard for us to do anything about it.
“However, if it were in our own licensed warehouse, then because he has entered into a contract the transaction will still count.
“On the other hand, if we had agreed to buy from him at N10,000 and the price drops to N9,500, he may just disappear which will now affect the integrity of the transaction.
“So we need this robust warehousing network in order for the exchange to operate successfully.”
He also said that the exchange was in need of a very strong Information and Communication Technology (ICT) support because things are no longer done manually.
He said the exchange was in need of both wide and local aerial networks with the requisite supporting hardware and software components.
Echikwu, however, said in spite of the many challenges, the exchange had recorded some achievements.
He said it had renovated and fully established five warehouses in some parts of the country from the 20 that were given to it by the Ministry of Agriculture, adding that by the next harvest season, they would be ready to do business fully.
He also said it had engaged successfully with state governments and commodity associations to make them see reasons to recognize the usefulness of the exchange to their activities.
“We are buying into the consciousness of requisite stakeholders and state governments that produce most of Nigeria’s commercially viable commodities are with us.
“Some private organisations that are commodity traders are collaborating with us to develop their commodity trading activities both for domestic trade and for export.
“Prior to now, we have entered into fully developed, signed and sealed technical partnerships with one of the biggest chambers for trading in agricultural commodities, the China Chamber For Natural Foods (CCFNA).
“We also have a technical partnership with Ethiopian Commodity Exchange (ECE) which is the most virile commodity exchange in Africa.
“Also, we visited Khartoum, Sudan to discuss and enter into partnership with merchant associations that handle commodity export in Sudan, we are talking to them and close to entering into a formal partnership with them.”
He expressed confidence that with improved funding and support from relevant stakeholders and government, the organisation would be positioned where it could do real commodity business.
He said that the main objective of the exchange was to facilitate trade by providing a sanctified efficient platform for buyers and sellers to transact their business.
“We do not buy, we do not sell; we merely provide a platform and we earn a commission of 0.7 per cent of the gross contract sum.”
He, however, said that to provide a sanctified, efficient platform for buyers and sellers to transact their business, the organisation had entered into partnerships for clearing and settlement to be handled by the Central Securities Clearing System (CSCS).