“The scope of our interest is in what we defined as pre-privatisation investment, which is to revive the Commodity Exchange by investing in the platform and making sure that the systems and processes work, so that people can actually see what the value in the asset is, and then the government can go ahead and privatise the company,” Uche Orji, Managing Director, NSIA said in an interview with BusinessDay.
“We have expressed interest to the Bureau for Private Enterprise (BPE) and the former Vice President (Namadi Sambo). We are re-engaging with the government now to drive that plan,” he added.
The purpose for which the ASCE was established in 2010 has hardly been achieved because of the dominance of the stock market and Nigeria’s attitude towards agriculture. Lack of proper understanding of how the commodity market works has also been been an issue for poor patronage, among other challenges.
Nigerian governments, past and present continue to express commitment to revamp the agricultural sector which is seen as critical to boosting the economy and creating jobs, but there is still the struggle of getting produce to a level where they can trade in a features market and create more income for poor farmers.
But the NSIA has identified agriculture as one of the choicest sectors in which it can invest part of the nation’s $1bn Sovereign Wealth Fund because of the sector’s capacity to create jobs and boost economic activities.
And according to Orji, the Commodity Exchange is one agriculture sector investments that the NSIA is considering committing part of the $400 million infrastructure component of the nation’s SWF. “With a Commodity Exchange, you can have a futures market which allows you to discount future cash flow,” he argued. “Hence it reduces cost of borrowing. It is viable in Ethiopia, it should be in Nigeria,” he stated.
The Exchange is also one of four government businesses/institutions that the NSIA would be investing in. The NSIA has already made some $10 million investments in the Nigerian Mortgage Refinance Company (NMRC); and is also acting as a co-developer of the nation’s Credit Enhancement Facility. It has also invested in the Development Bank of Nigeria (DBN).
Experts believe that reviving the Commodity Exchange is critical, especially at this point that the government thinks it could resort to agriculture, in the face of dwindling oil revenue.
Idris Adamu, CEO, Daura farms, said the ASCE, when put back into business could even serve as a regional commodity exchange, noting that there is now a “race as to who would be the first to establish one, especially in West Africa.”
“We cannot have have a credible agricultural sector if our products cannot trade on the Exchange,” Adamu observed.
“Ghana is about to set up one, so we have to move really fast with revitalising our own Exchange,” he further suggested.