Need for structured grain-trading systems in Africa grows

by admin 0

“Not so much has happened in reality in terms of really removing trade barriers on cross-border trade. However, we have seen a lot of engagement and a lot of discussion between government and the private sector to look at possibilities of being able to address this issue and remove these barriers,” Easter African Grain Council executive director Gerald Makau Masila told CNBC Africa.

“There are some initiatives that have been taken at the COMESA level, at the SADC and EAC level, looking at simplifying the process of clearing goods across the borders, coming up with initiatives like the one-stop border post. A lot of this has been mainly the discussion level, but right on the ground, when you go to cross the borders, we still are having issues in Africa.”

Africa’s farmers can potentially grow enough food to feed the continent, and also avert future food crises, if countries remove cross-border restrictions on the food trade within the region.

According to analysts, the continent could also generate an extra 20 billion dollars in yearly earnings.

The proposal for a structured trading system could however be a game changer for agri-business financing and trade in the continent.

“The structured grain-trading system is for sure a game changer, and it’s not exactly a new concept because it’s there in other parts of the world. If you go to the US, Australia, you will find that grain is traded in a very structured way,” Masila explained.

“What we mean by structured trade is that you have a good integration between the producer and the buyer. A commodity exchange would be the apex when it comes to structured trading systems.”

South Africa’s Johannesburg Stock Exchange has a fully integrated and structured system for grain, indicating that the process can exist within other African countries as well.

 Ethiopia also has the Ethiopia Commodities Exchange, and the Rwanda East Africa exchange has been recently set up as well.

“We have different stages in different countries and different economic blocs. If you look at the Eastern Africa region, some countries have actually made the step of putting up commodity exchanges and starting to get them operating,” said Masila.

“At the East African Community level, there’s been discussion about coming up with a regional commodity exchange for the region, because one of the key issues that has to be addressed is the volume and the quantities. None of the countries standing alone has actual sufficient volumes for a viable commodity exchange.”