Dr. Kwabena Duffour, Minister of Finance and Economic Planning has charged the Securities and Exchange Commission (SEC) to quicken work on the establishment of the commodities exchange to stabilize commodity prices and create alternative exchanges to accommodate small and medium enterprises.
“SEC should facilitate the establishment of the commodities exchange in the hope of stabilizing commodity prices as well as creating alternative exchanges that can accommodate small, medium and micro enterprises,” Dr. Duffour made this call at a workshop in Accra.
SEC, the lead promoter of the commodities exchange and warehouse receipts system in the country is mandated to develop the needed regulatory framework to facilitate the establishment of the exchange once government accepts the recommendations.
It is currently evaluating the submitted applications received from experts for the drafting of the needed framework, which will be the blue print document for the operations of the exchange, a senior official at SEC disclosed to B&FT in an interview.
Dr. Boeh-Ocansey, Director-General, Private Enterprise Foundation has also endorsed the idea. He said: “Since Ghana’s economy was basically agricultural, it would make a lot of sense to see to the establishment of an effective commodity exchange that would not only eliminate the regular post-harvest losses through the buying of produce for storage, but also put money in the pockets of farmers in the short-term to facilitate their downstream operations”.
Ghana has suffered three failed attempts towards the establishment of the commodities exchange, due to the unavailability of a regulatory framework.
A commodities market or exchange is a platform where various commodities and derivatives are traded.
Most commodities exchange trade in agricultural products and other raw materials like wheat, barley, sugar, maize, cocoa, coffee, cotton, milk products, oil and the metals.
The exchange when fully operational could raise the hopes of millions of farmers, especially large-scale farmers and make their lives more meaningful.
The setting-up of the exchange will help to deal with the challenges facing the supply of agricultural produce, which in turn will deal with food inflation.
It will also ensure guaranteed prices for farmers which will basically help to clear the agricultural produce market as farmers produce to meet contracts for specific quantity, quality and supply date.
They would therefore be empowered and encouraged to produce to meet demand in the lean or bumper season.
“There is the need for an effective warehouse receipt system and a robust market information system before the establishment of a commodities exchange can be viable.
There is no doubt that a commodity exchange for futures trading is necessary for the efficient functioning of an economy.” A commodity price expert has opined.
In West Africa, and across sub-Saharan Africa, it is rightly envisaged that a properly functioning exchanges that play a big role in poverty alleviation initiatives would increase the incomes of agricultural producers.
Ghana would be the fifth country in Africa, after South Africa, Nigeria, Kenya and Ethiopia to operate commodities exchange, which aims to embark on an aggressive overhaul of its agricultural sector.
This will promote the use of derivatives like forwards, futures and options in Ghana as the door is opened to foreigners to participate in speculating on agricultural products or metals traded on the exchange.
The prime objective is to bring producers, buyers and consumers together to trade on a common platform by providing ready market for farm gate products from the agricultural centers.
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