CBN Set To Inject N50bn As FG Stops Privatisation Of Commodities Exchange 

The Central Bank of Nigeria on Thursday said it would invest about N50bn through its InfraCo structure to reposition the Nigerian Commodities Exchange into a commercially viable platform in Nigeria for delivering efficient pricing of Nigeria’s agric produce.

The CBN Governor, Mr Godwin Emefiele said this On Thursday during a media briefing at the apex bank’s headquarters in Abuja.

President Muhammdu Buhari had recently approved a proposal by the CBN to reposition the Nigerian Commodity Exchange.

Emefiele said that an effective and efficient commodity exchange ecosystem has a critical role in achieving the objectives of price stability, through its provision of an organized platform for farmers to trade products in a transparent and efficient market.

The Governor said that the Federal Government along with the Central Bank of Nigeria has implemented several intervention schemes in the agriculture and manufacturing sectors, aimed at boosting employment generation and wealth creation, reducing dependence on imported food items, conserving foreign exchange earnings, and spurring economic growth.

He said these interventions in the agricultural sector, particularly the Anchor Borrowers’ Programme and Commodity Development Initiative, sought to strengthen key agricultural commodities’ value chains, enable improved productivity in the agricultural sector, and increase sourcing of inputs locally by stakeholders in the manufacturing sector.

These programs, he noted have also helped to improve self-sufficiency in the production of key staple items, which is in line with the government’s food security objectives.

However, Emefiele lamented that despite the gains that have been achieved, there are still significant challenges within the Nigerian agricultural commodities value chain that would need to be addressed in order to accelerate investment and productivity in the sector.

He gave some of these challenges to include poor infrastructure and logistics which impede the movement of produce from farm to market; limited storage and preservation facilities; lack of adequate liquidity to support off-take of agricultural goods; unavailability of pricing information to market participants; and activities of middlemen who currently aggregate commodities with the sole aim of manipulating prices for selfish gains.

He said, “These core issues that affect Nigeria’s commodity market must be addressed in order to properly harness the benefits that the agriculture sector could provide to our economy.

“There is no doubt that an effective and efficient commodity exchange ecosystem has a critical role in achieving the aforementioned objectives, through its provision of an organized platform for farmers to trade products in a transparent and efficient market.”

He added that the Nigerian Commodity Exchange has not been able to catalyze agricultural production due to several structural and idiosyncratic challenges which includes limited funding and investment; poor financial performance; deficiency in physical infrastructure (warehouses, laboratories, grading capability);inadequate warehouse receipts and logistics infrastructure; lack of broad legal framework and standards setting and lack of supervisory clarity and overlapping supervisory mandates

He added, “The CBN has been engaging the management of NCX and other key stakeholders on strategies to revamp the Exchange and upgrade its facilities, similar to what exists in other African and western countries where commodities exchanges are a key drivers of economic growth.

“It is against this backdrop that Mr President considered and approved a proposal for the repositioning of NCX, in order to consolidate on the government’s efforts aimed at strengthening the agriculture value chain, part of which includes connecting farmers to markets beyond their immediate environments.”

Speaking on some of the measures contained in the President’s approval to reposition the Exchange, he said that CBN, as majority shareholder of NCX, should collaborate with Nigeria Sovereign Investment Authority and Africa Finance Corporation, under the Infraco Structure, to develop and implement a strategic repositioning plan for the NCX.

This, he added, is to make the NCX an efficient world class Commodity Exchange.

He also said there would be the formation of a Steering Committee chaired by the CBN Governor and including representatives from NSIA and AFC as well as the Federal Ministries responsible for Finance, Budget & National Planning; Industry, Trade and Investment; and Agriculture and Rural Development, to oversee the implementation of this strategic plan.

He added that there would be revalidation of CBN’s 59.7 per cent majority shareholding stake in NCX to enable it implement far reaching measures, which include reconstitution of NCX’s Board and Board Committees, appointment of Chairman by the CBN, and an investment of at least N50bn through the InfraCo structure.

The CBN, he added, is also expected to engage the Nigeria Postal Service on possible utilisation of its assets to develop model warehouses across the federation.

He said based on the President’s approval, the current plan to privatise the NCX be stopped forthwith given the unfortunate arbitrage opportunities which the government has noticed in the private sector arrangement which has become an obstacle in moderating food prices in Nigeria.