The Sunday Mail
THE incorporation of the Zimbabwe Mercantile Exchange (ZMX) into the General Assembly of the Association of African Commodities Exchange (A-ACX) is expected to provide a major stepping stone for local producers’ entry into the regional agricultural export market.
Access to export markets has been one of the biggest challenges faced by local farmers, especially smallholder producers. However, this will soon be a thing of the past, after the ZMX became a member of the regional body of agricultural commodities exchanges.
The ZMX operates a warehouse receipt system that enables commodity holders to deposit their goods with a designated warehouse in exchange for a warehouse receipt. The warehouse receipt issued by ZMX is a negotiable instrument that can be used as collateral for credit facilities. It can also be used as an instrument of exchange in commodity spot market trading. In addition, it provides an automated platform where commodities are traded for immediate delivery.
ZMX chief executive officer Mr Collen Tapfumaneyi said the admission into A-ACX would facilitate trading of local agricultural produce across regional agricultural commodity markets, fulfilling one of the exchange’s mandates.
“The Association of African Commodity Exchanges will expedite the realisation of one of ZMX’s long-term plans to facilitate cross-border trading of commodities,” he said in response to questions from this publication.
“This will go a long way in enhancing trading activity on the exchange while opening up opportunities for the exchange to facilitate import and export commodity financing through the warehouse receipt system. The relevance of the exchange to producers, financiers and other players in the commodities value chains will be significantly enhanced,” he said.
Recently, the ZMX, together with 15 other commodities exchanges in the region, became pioneering members of the A-ACX following an inaugural forum of the exchanges convened in Accra, Ghana, last month.
The event was organised by the African Continental Free Trade Area (AfCFTA) secretariat and was aimed at fostering the creation of the A-ACX, under the AfCFTA umbrella, in a move that will promote seamless trading of commodities within the region.
The forum, in collaboration with the Ghana Commodity Exchange and supported by the World Food Programme Ghana, hosted heads of African commodities exchanges and officials from various African trade ministries.
Delegates from Zimbabwe included representatives from the ZMX and the Ministry of Foreign Affairs and International Trade stationed at the Zimbabwean Embassy in Ghana.
Mr Tapfumaneyi, who was among the delegates at the forum, expressed optimism at the launch of the association, which is expected to widen markets for local farmers.
“Farmers, both large and small, will have equal opportunities to access the whole continental market. As you know, 54 of the 55 African countries are part of the AfCFTA common market and this can only be excellent news to local producers. Most farmers produce for markets, therefore, the bigger the market, the better for them as this widens their marketing options.
“In addition, guaranteed markets with prospects of good prices are sweet music to financiers. Our producers will, therefore, stand an even better chance of accessing the much-needed financing as marketing opportunities widen,” he said.
Considering this, the exchange will hold awareness campaigns to educate farmers on this development and enable them to fully benefit from it. This is in addition to improving on their agronomy practices to enhance quality.
“This should help reduce production costs and make them not only competitive but also profitable,” he said.
In the meantime, the forum ended with a unanimous decision to establish the A-ACX, accompanied by a comprehensive list of strategic activities and objectives. As a key action point, a steering committee comprising CEOs from five commodity exchanges was formed.
Mr Tapfumaneyi became one of the pioneering committee members — together with representatives from Ghana, Nigeria, Cote d’Ivoire, and Tanzania. They are expected to play a critical role in transforming the A-ACX’s objectives into action.
The A-ACX also marked its calendar for active participation in the ongoing Intra-Africa Trade Fair 2023 in Cairo, Egypt.
Additionally, the signing of a memorandum of understanding will take place to formalise the AfCFTA Association of Commodity Exchanges under AfCFTA’s Guided Trade Initiative.
“The A-ACX will engage stakeholders in their respective countries to share essential insights, and efforts to secure funding for the establishment of the association’s secretariat and ensure its legal formation will be initiated,” he said.
The A-ACX members will engage stakeholders in their respective countries to spread key insights.
Moreover, funding avenues are to be explored for the establishment of the association’s secretariat and to ensure its legal formation.
By aligning with the objective of the AfCFTA, the A-ACX seeks to catalyse increased trade across all sectors of Africa’s economy, bolstering economic growth continent-wide. The creation of the A-ACX is, undoubtedly, a pivotal step in promoting intra-African trade in commodities and related services.”
According to the Ministry of Lands, Agriculture, Fisheries, Water and Rural Development, agriculture is one of the key sectors of the economy and holds the potential to contribute up to 20 percent of the country’s Gross Domestic Product, while providing livelihoods to nearly three quarters of the country’s population.
Further, the ministry contends the performance of agriculture influences other key economic sectors.