AFEX Commodities Exchange Ltd on Wednesday signed a Memorandum of Understanding with the Financial Market Dealers Quotation (FMDQ) to open additional sources of finance for the agricultural sector in the country.
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Speaking during the signing in Abuja, the Chief Executive Officer of AFEX, Mr Ayodeji Balogun, said the goal of the collaboration was to impact over one million smallholder farmers in terms of organising physical market for commodity trading in the country.
Balogun said the new partnership would support innovative financing structures for the agriculture sector and leverage AFEX’s established infrastructure and supply chain network.
According to him, AFEX is on a path to building Africa’s second commodities derivative market and this partnership sets the tone for that journey.
“We see a clear path to product innovation that will unlock a wider range of products that are able to be traded within Nigeria’s capital markets, promoting broad based wealth creation that is accessible to every Nigerian.
“We currently work with 106,000 farmers on a daily basis and over 70 per cent of them have transacted a business with us.
“Between October and now, about 45,000 farmers have stored, traded or sold products through us across 15 states in six primary commodities including maize, soybeans, paddy rice, sorghum, ginger and cocoa,’’ he said.
The Chief Executive Officer of FMDQ Group, Mr Bola Onadele, said their goal was to support the growth of the agricultural sector through commercial and market driven propositions.
“Through the partnership, we will be introducing new products aimed at de-risking the value chain, attracting capital market funding to the sector and diversifying the existing products available to investors in the space.
“As members of the Securities and Exchange Commission’s (SECs) implementation committee on Commodities Trading Ecosystem, an area of focus will be the Nigerian Agricultural Commodities Ecosystem,’’ he explained.
Mr Les Male, the Chief Executive Officer of Dubai Gold and Commodities Exchange, said he was in the country to celebrate the successes of AFEX and assist them embark on the next stage of its journey.
AFEX since inception in 2014 had built a strong supply chain infrastructure to support the security of agricultural products. It operates 45 warehouses in the country’s key grain producing areas.
It accounts for about 100,000 tonnes of the total national storage capacity.
AFEX has reached 106,000 farmers and traded 126,400 tonnes of commodities with a turnover of over N14 billion.
FMDQ Group is Africa’s first integrated financial market infrastructure (FMI) group positioned to provide seamless execution, clearing and settlement of financial market transaction through its subsidiaries.