Smallholder farmers and other participants along Ghana‘s agriculture value chain look set to rake in more returns on their investments following the launch of the Ghana Commodity Exchange (GCX). Ghana is the latest African country to develop a national commodities exchange.
The GCX is a market platform for trading local commodities in a transparent and uniform manner with the view of improving efficiency and profitability of the most dominant sector in Ghana’s economy.
The Ghana Commodity Exchange will start with spot trading and phase in futures and other derivatives contracts. The GCX will start with trading of agriculture commodities, including maize, soybeans, paddy rice, palm oil, and ground nuts. Other key agriculture and non-agriculture commodities will be introduced as the exchange develops.
President John Dramani Mahama, who launched the GCX in Accra, said the initiative is a positive step towards realizing the government’s vision of a revitalized agriculture sector that will support efforts to boost and diversify Ghana’s export trade, as well as maximize the huge potential of the agriculture sector as a key economic trigger.
“[Agriculture] is a dominant sector of the economy that offers informal employment to the vast majority of the country’s population; and that is why we need a platform that is backed by a warehouse receipt system as a springboard for national economic growth and prosperity,” President Mahama said.
“This project will repress the pain of the country’s economic transition process, as it will move the economy from import-driven to export-driven; formalize the [agriculture] trading activities and sanitize commercial activities in the sector to attract investments and boost productivity,” he added.
President Mahama said the launch of the GCX addresses challenges facing smallholder farmers and associated value chain participants. The GCX will curb the perennial issues of post-harvest losses and access to capital, he added.
“Government recognizes the [agriculture] sector’s viability to push socio-economic growth, and we anticipate that this project will transform the lives of farmers, stakeholders along the value chain, and the Ghanaian economy as a whole through sector productivity and profitability,” he said.
The GCX, which is expected to be fully operational by the first half of next year, has the potential to transform Ghana’s agriculture landscape. Furthermore, the exchange strengthens the position of smallholder farmers who contribute significantly to Ghana’s economy.
Food and Agriculture Minister, Fiifi Kwetey, said the initiative is just what the sector requires to fully explore and transform Ghana’s agriculture sector.
“The main factor limiting the economic potential of the [agriculture] sector is lack of a common market that will boost the trust and confidence of farmers, as well as financial institutions to invest extensively in the sector toward economic growth,” Kwetey said.
“Through this project, agro-processors and sector actors along the value chain will have a reliable supply of quality commodities to push the quest for value addition to local raw materials,” he added.
The Ghana Commodity Exchange (GCX) initiative is a public-private partnership (PPP) between the Ghanaian government and a private sector financing consortium comprised of domestic and global institutional investors: Ecobank Ghana Limited; GCB Bank Limited; London-based private equity fund, the 8 Miles Fund; and the International Finance Corporation (IFC).
The GCX buildout will be led by Eleni Gabre-Madhin, PhD, the CEO of Nairobi-based Eleni Exchanges. Eleni Exchanges is a recognized industry leader in establishing and operating commodity exchanges in frontier markets. In 2008, Eleni Exchanges launched the Ethiopia Commodity Exchange (ECX). Gabre-Madhin is the Founder of the Ethiopia Commodity Exchange and up to 2012, she served as the CEO of the ECX.
The ECX was the first-of-its-kind spot and futures commodity market exchange in Africa. The ECX is now hailed as an innovative model and recognized globally as an African success story. Gabre-Madhin led the ECX as the company grew in 3 years to $1.2 billion trading value; volume of 500,000 tons; over 1 million phone call-ins/month on the market data platform; 10,200 trading clients; and nearly 1000 employees.