African Exchange Holdings (AFEX), a pan-African holding company founded by Tony O. Elumelu, Chairman of Heirs Holdings, Nicolas Berggruen, Chairman of Berggruen Holdings, and Jendayi Frazer, President of 50 Ventures, to establish commodity exchanges across Africa, today signed a Memorandum of Understanding (MOU) with Nigeria’s Federal Ministry of Agriculture to create a pioneering warehouse receipt system that will enable Nigerian farmers and cooperatives to safely store their produce at accredited warehouses.
Dr Akinwumi Adesina, CON, Nigeria’s transformational Minister of Agriculture, said, “Strengthening agricultural markets is critical to diversifying Nigeria’s economy. Our partnership with AFEX will help to improve the access of farmers to markets, reduce post-harvest losses, stabilize prices and raise their incomes. We are rapidly modernizing agriculture in Nigeria and the development of warehouse receipt systems will underpin the successful establishment of thriving agricultural commodities exchanges in Nigeria.”
Elumelu, the Chairman of AFEX Holdings, said, “We are pleased to be working with the Nigerian government on this project to deliver transformative, sustainable investment to the country’s agribusiness sector. This initiative is a step towards financially empowering more farmers and ensuring that agriculture is not only commercially viable, but a strong positive contributor to the Nigerian economy. This builds on the experience and success of our subsidiary – East Africa Exchange – in Rwanda which has become a critical player in agribusiness development across the continent.”
He continued: “My partners and I are greatly encouraged by the transformation of Nigeria’s agriculture sector as driven by Dr Adesina and we want to support the federal government in its innovative approach.”
Nicolas Berggruen, the founder and president of Berggruen Holdings, said, “Agriculture in Africa is key to the prosperity of the continent. Specifically for Nigeria, we are investing in the infrastructure needed to ensure the flow of commodities from farms to the local, regional, and global marketplace.”
Nigerian farmers may now use receipts for their produce as collateral for loans. This will control price volatility due to the availability of buffer stock, enabling farmers to sell produce at better price points. The two-year pilot phase of the warehouse receipt system covers seven states, mostly in northern Nigeria, where agriculture is by far the largest economic sector – Kano, Kaduna, Katsina, Zamfara, Kwara, Gombe and Oyo – and will commence in October 2013.
The Federal Ministry of Agriculture will support the warehouse receipt system by creating the enabling environment that is essential for its successful delivery, and will also provide warehouse infrastructure.
Jendayi Frazer, the former US Assistant Secretary of State for Africa, who is the Managing Partner at AFEX, stated, “The warehouse receipt system will help improve food security across Nigeria. It will not only give farmers and cooperatives better access to markets by linking their market produce to high-value buyers, but will also deliver higher profits for stakeholders. AFEX believes our electronic warehouse receipt system and improved warehousing operations will be the stepping stone to establishing a vibrant commodities exchange in Nigeria.”