By Modupe Gbadeyanka
In order to increase liquidity and competitiveness in the commodity market, the federal government has been urged to incentivise the trading of commodities through the exchange.
Also, government has been advised to make provision for high-quality seedlings to farmers because this remains very critical in boosting the quality of harvest, which will in turn impact positively on the commodity ecosystem.
These suggestions were made by stakeholders, who gathered in Abuja this week for a 2-day International Conference on the Nigerian Commodities Market (ICNCM 2020).
The programme was organised by the Securities and Exchange Commission (SEC) and was themed Commodities Trading Ecosystem: Key to Diversifying Nigeria’s Economy.
According to a communique issued at the end of the conference, access to long-term funds through the Nigerian capital market was identified as critical towards the holistic development of the agricultural sector adding that, “Discourse should therefore revolve around how the capital market could create long term funding for Agriculture and Agri- businesses.”
Participants agreed that Nigeria must decisively address the challenges across the entire gamut of the agriculture value chain in terms of access to finance by farmers, aggregation of smallholder farmers, storage, warehousing and transportation, establishment of efficient irrigation mechanisms to ensure year-round farming, availability of effective de-risking frameworks and the introduction of modern scientific solutions as well as cutting-edge equipment for mechanized farming.
The regulator, on the other hand, was urged to remain an impartial enabler and promoter, providing a framework for exchanges, institutions and participants in the commodities ecosystem to thrive.
According to the participants, “Stakeholders need to ensure efficiency in the commodities ecosystem for securitization to be successful. This could be achieved by ensuring gaps in the value chain are addressed and responsibility to addressing these gaps taken up by appropriate stakeholders.
“Nigeria must begin to adjust to the reality of the emergence of digital commodity exchanges that trade digital assets. Adaptable technology for trading of commodities that addresses needs of millennials should also be developed.”
In her remarks, acting Director General of SEC, Ms Mary Uduk, while commending participants for a successful conference, said one of the key initiatives of the 10-year Capital Market Master Plan is the development of a thriving commodities trading ecosystem as part of the capital market’s contribution to the national economy.
According to her, while it is clear that Nigeria is well endowed with agricultural, metals and energy commodities, the. nation’s potentials in these areas are unrealised.
She said, “The good news however, is that the capital market can be used as an avenue to unlock these potentials and diversify the nation’s economy, while providing jobs, creating values and contributing to governments’ revenue.
“We believe that if we can develop and institutionalise a vibrant commodities trading ecosystem in Nigeria, we can substantially address problems such as lack of storage, poor pricing, non-standardization, as well as low foreign exchange earnings affecting our agriculture and other commodities sub-sectors.”
