Govt moves to regulate warehouse business for commodities exchange

The Government has tabled a Bill before Parliament that seeks to regulate the business of providing warehouse services and value certificates for stored agricultural produce in a move that is poised to boost commodities exchange in the country.
A worker at Magerwa bonded warehouse. The government is seeking to regulate warehouse services and value certificates for stored agricultural produce to boost commodities exchange.....
A worker at Magerwa bonded warehouse. The government is seeking to regulate warehouse services and value certificates for stored agricultural produce to boost commodities exchange.....

The Government has tabled a Bill before Parliament that seeks to regulate the business of providing warehouse services and value certificates for stored agricultural produce in a move that is poised to boost commodities exchange in the country.

Presented by the Minister for Agriculture and Animal Resources, Dr Gerardine Mukeshimana, yesterday, the draft law regulating the warehouse receipt system in Rwanda seeks to encourage farmers who would like to make more money from their produce.

 

Under the Bill, whose basis was approved by the Lower House, yesterday, any person who wishes to operate a warehouse receipt system will have to apply for a license from the Rwanda Capital Markets Authority.

 

The operator of a warehouse receipt business will be issuing a certificate to the farmers showing how much their produce is worth and the latter will be able to use the paper as collateral in order to get loans in banks while they will also have the option to sell their produce at any time.

 

“Most farmers currently sell their produce right after harvest. The new system will help them to have a safe place to store their produce and sell it when prices improve,” Mukeshimana said.

Rwanda has warehouses across the country with capacity to stock tens of thousands of tonnes in grains but the new law is likely to boost efforts to venture into the business by more private operators which will improve small farmers’ access to commodities exchange services, officials say.

“Not every available warehouse in the country will do the warehouse receipt business. This will be more of a private sector job than it is a government’s role. What we need to do is to mobilise farmers and traders about this business,” the minister said.

While only one company – the Kigali-based East African Exchange (EAX) – in the country is presently involved in the commodities exchange business, officials said setting up a regulatory framework for warehouse receipt system will help bring in more players.

The agricultural produce that will be stored will mainly include imperishable products such as grains like different kinds of beans, maize, sorghum, rice, and wheat, among others.

Most legislators called for the Bill to cater for smallholder farmers’ interests instead of caring for big businesses’ benefits alone.

“It shouldn’t be the same case as warehouses for Irish potatoes whose existence seems to help dealers instead of improving prices for smallholder farmers,” said MP Nura Nikuze.

MP Adolphe Bazatoha agreed, calling for the proposed law to ensure that smallholder farmers get access to the warehouse receipt system services closer to their villages.

“How will small farmers be facilitated to access the warehouses? Isn’t this system going to help dealers instead of the average farmer?” Bazatoha wondered.

Debates and analysis on the draft law will continue at the committee level in the Lower House, a process that allows more room for debates and necessary modifications on the Bill before it is passed into law.

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