Experts at the West African Trade & Commodity Finance Conference
Global trade experts have expressed doubts about the ability of Ghana to effectively float a Commodities Exchange system at the scheduled time being promised by government and capital market officials in the country.
It is feared that the country may overshoot the timelines that it has set for itself.
Capital market regulator, the Securities and Exchange Commission (SEC), has set a 2013 deadline while some ambitious government officials have indicated a starting date not exceeding the close of 2012.
At the sidelines of the West African Trade and Commodity Finance Conference held in Accra on Tuesday, June 26 to June 27, CITY & BUSINESS GUIDE caught up with a few experts at the conference and their opinions were almost skeptical about the timelines being proposed.
Ghana is said to have slackened in investment in agricultural infrastructure necessary for a smooth sailing commodities exchange.
For several years now, Ghana has been flirting with the idea of starting a Commodities Exchange that would enable farmers form producer blocs to get a better price and more stabilized income from their commodities. However, several bottlenecks have hampered the establishment of the exchange.
“In Ghana, there are a lot of proposals down the line, but it will take time,” said Kasim Halidu Ahmed, an Audit and Compliance Manager from Global raw material supplier, OLAM.
Mr. Ahmed noted that it could take Ghana up to two years to properly set up a working Commodities exchange regime.
According to Sameer H. Gupta, the Finance Director of the Stallion Group, a major player in the rice importation market in Sub-Saharan Africa, to make commodities exchange seamless, the country needs to have enough infrastructure for stocking commodity supplies, an asset that the country lacks.
“Cocoa can be done because they have the structures, they have an institution. You look at the Cashew and Shea-nut, where are they now? It has just began even then, are farmers willing to register their commodities, no. Farmers are not willing to register because they have been cheated for long,” said Kasim Ahmed.
“To be honest, the commitment comes with the need. We have reached a stage where it is the next course of action. If we do not create a commodities exchange, there would be no purpose to agriculture,” noted Kwaw Blay, a legal practitioner at Accra-based law firm, Blay and Associates.
“The establishment of a commodities exchange is very important in that when the world economy fluctuates, with prices going haywire, a West African commodities exchange would be able to insulate farmers, ” Samuel Baddoo, also of the same law firm, told Daily Guide.
According to Craig Polkinghorne, Global Head of Trade and Commodity Finance at Standard Bank, “For commodities exchange to work you need to have enough participants, both buying and selling, otherwise it becomes a dead entity. So you need active participants, you need the ability to have free movement of price.”
Mr. Polkinghorne revealed that a developed capital market is the main pre-requisite for a functional commodities exchange.
He quickly added that even though the capital market is not that sophisticated, Ghana does have a yield curve on investments that will make fixing price for a 12 month period for instance possible. A predictable yield curve can set the tone for a functional capital market.
“We have a three-year pricing point for a Ghanaian entity and that helps sometimes in developing the capital market,” he notes.
The proposed exchange would trade crops that have a longer shelf life, including rice, corn, soybeans, sorghum, rubber, etc.
The World Bank has done extensive work on the proposed exchange with funding almost totaling about US$ 400,000.
 By Raphael Adeniran
