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Nigeria’s Central Bank plans to set up commodities exchange
Governor of the Central Bank of Nigeria Godwin Emefiele, says plans are on-going to commence operations of a commodities exchange within the next 90 days once the necessary approvals are obtained. Joining CNBC Africa to discuss the implication of this and for an outlook on Nigeria’s Agric sector this quarter is Kola Masha, Managing Director of Babban Gona.
Mon, 01 Feb 2021 14:38:04 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- The availability of tradable securities in the agricultural sector can boost productivity and profitability for farmers by providing access to financing for high-quality inputs.
- Efficient implementation and addressing challenges in infrastructure, such as storage facilities and quality standards, are crucial for the success of the commodities exchange.
- Nigeria's participation in the African Continental Free Trade Agreement offers opportunities for strengthening exports, but improvements in farm productivity and crop diversity are necessary to enhance competitiveness in the global market.
Nigeria's Central Bank is set to launch a commodities exchange within the next 90 days, a move that could potentially unlock financing and stimulate growth in the country's agricultural sector. Governor of the Central Bank of Nigeria, Godwin Emefiele, highlighted the importance of tradable securities in the agriculture sector, which could support farmers in improving their productivity and profitability. This initiative aims to provide farmers with the necessary funds to purchase high-quality seeds and fertilizers to achieve best practice yields. The central bank has already taken steps to increase farmers' access to financing through programs like the anchor borrower program, and further efforts are expected to drive productivity and reduce inflation. However, the success of the commodities exchange will depend on efficient implementation and addressing key challenges in infrastructure. Currently, the lack of storage facilities for farmers' produce and concerns about the quality of goods traded on the exchange pose potential obstacles to its effectiveness. In light of the high food inflation rate and security issues affecting Nigeria's agricultural sector, improving access to quality inputs and financing for farmers is crucial to boosting productivity and stabilizing prices. Nigeria's participation in the African Continental Free Trade Agreement offers an opportunity to strengthen exports and diversify the agricultural market. With a vast potential market in neighboring countries, a commodities exchange could facilitate easier transactions and stimulate exports. However, Nigeria's competitiveness in the global market may be hindered by low farm productivity and the limited variety of exportable crops. To enhance the success of the commodities exchange, the focus must be on addressing fundamental challenges such as improving seed quality and enhancing farmers' access to financial resources. While the launch of the exchange is a significant step, more efforts are needed to streamline export infrastructure, reduce export costs, and enhance efficiency in port operations. Smallholder farmers play a vital role in Nigeria's agricultural sector, and their protection is essential in the implementation of the commodities exchange. The exchange should be structured to stimulate demand for farmers' produce and facilitate easier access to financing, without creating undue restrictions or reducing value for farmers. Ultimately, the success of the exchange will depend on its impact on the livelihoods of everyday Nigerians and its ability to drive growth and sustainability in the agricultural sector.
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