Rwanda will soon be part of a connected African market with Nigeria ready to start selling their agricultural produce through the Rwanda East African Exchange (EAX).
Jendayi Fraser, the exchange’s board chair who was speaking during the visit of Akinwumi Adesina, Nigerian minister for agriculture and rural development to EAX Kigali City Tower offices yesterday, said there will be time when Nigerian produces will be sold in the East African Exchange.
EAX Rwanda is the first part of a regional exchange that was launched in January last year intended to facilitate farmers to sell agricultural products directly to the market without a middle man.
It is a subsidiary of Lagos-based Africa Exchange Holdings Ltd (AFEX), which seeks to develop a network of commodity exchanges across Africa to transform trade and improve rural dwellers’ incomes.
“Most African countries need the intra-African trade to have their competitiveness globally and attain their economies of scale,” she said.
Trading of commodities at the EAX is done in the same way that stocks and bonds are traded on a stock exchange, only that in this case, it requires warehousing of the commodities.
The EAX inspects and accredits warehouses where farmers can deliver goods in exchange for receipts which are then sold to buyers or used as collateral by the farmers to access credit from banks as the receipt is proof of ownership.
The Nigerian minister said the key issue was to have more warehouses under the exchanges’ management and having high volumes attained along the value supply chains.
“The whole idea is to have the farmers that are within the vicinity use the high capacity of the silos to store their produce from there and be able to trade it at their favourable times,” he said.
He said Nigeria had increased its rice production by 2.4 million metric tonnes last year, a significant percentage of the rice it imports last year and that they were looking at storing and trading some of the grains and other perishables through Rwandan warehouses.
“A rice contract can sell on our exchange because the advantage of the East Africa Exchange is that when you have the control of the quality of the produce, you could create a contract and that contract could enable the product to be sold and picked up from anywhere in the world,” explained Frazer.
Frazer also said that with the electronic trading platform they were using, they were not limited by space.
Paul Kukubo, the chief executive of the Exchange, said the new move would enable the establishment of new potential markets and reduce price fluctuations that come with the changing agricultural seasons.
Currently, the EAX is using Nasdaq trading platform to facilitate trading on commodities.
Figures from the exchange show that 50,000 metric tonnes of maize, beans, coffee, pyrethrum and tea have been traded since its opening.