Legal instrument stalls commodities exchange

Legal instrument stalls commodities exchange
Published: 13 December 2013
The Agriculture ministry says government is finalising a legal instrument to facilitate the launch of the long-awaited commodities exchange.

Clemence Bwenje, economics and markets director in the Agriculture ministry, yesterday told an agriculture symposium in Harare that it will be launched before 2014 harvesting season.

Establishment of the exchange has been on the cards for the past two years.

Under the previous government of national unity, it was supposed to be operational in the first quarter of this year.

"The setting up of a commodities exchange is part of a broader market reform process Zimbabwe is embarking on. Most of the things required for the introduction the exchange are already in place and all we need to do is to appoint a board using a legal instrument and all things will begin to flow," he said.

To begin with, the new commodities exchange - which would be integrated with a warehouse receipt system - will trade only grains, cereals and oil seeds.

Bwenje noted that government would initially own 100 percent of the exchange, as a way of building confidence in the market, before placing 75 percent shareholding into the private sector.

Zimbabwe previously had a thriving commodity exchange, which was closed in 2001 when the government gave the monopoly on corn and wheat trading to the Grain Marketing Board (GMB).

Industry experts say the exchange is expected to end the GMB monopoly, although the State will continue to play a strong role.

"The two (commodities exchange and the GMB) should co-exist, with GMB operating as a buyer of last resort while at the same time maintaining price floors on grains," said Bwenje.

He added that government was working on recapitalising GMB so that it can continue to play its role as a commercial warehouse for grains.

Agriculture in Zimbabwe is recovering well, particularly tobacco, partly aided by subsidised fertiliser.

However, there is a huge need for financing to rehabilitate irrigation schemes and improving farms, as well as supporting the recently-settled "A2 farmers".

Commodity exchanges are part of a move to try to revitalise agricultural productivity in Africa and should be seen as part of a holistic solution,
- dailynews
Tags: Exchange,


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