Nigerian warehouse receipts system shows technical superiority in the region
Today, the Nigerian Strategic Grain Reserve (SGR) and Federal Ministry of Agriculture and Rural Development (FMARD) conducted a technical walkthrough of a pioneering electronic warehouse receipt platform deployed by Africa Exchange Holdings (AFEX), which enables Nigerian farmers, cooperatives and traders to safely store their produce at accredited warehouses and access financing. Within two months of signing an MOU with FMARD, AFEX has commenced operations of the Warehouse Receipt System – a record speed in public private partnerships.
AFEX is the pan-African commodity exchange company founded by Tony O. Elumelu, Chairman of Heirs Holdings, Nicolas Berggruen, Chairman of Berggruen Holdings, and Jendayi Frazer, President of 50 Ventures, which was started to establish commodity exchanges across Africa.
When fully operational, the new warehousing project will significantly reduce the risk of lending to stakeholders in the agriculture sector, by providing secure storage and real time online tracking of warehouse receipts; increasing speed and reducing transaction costs.
Commenting to the media, Tim Shortley, Chief Operating Officer, AFEX, said, “The timing for the project is ideal because trading and storing of harvested commodities just started and the system is ready. We have launched the system in the northwest region of Nigeria; however, we plan to scale across other states in 2014 so farmers across Nigeria can feel the benefits of the warehousing project. We hope that agricultural commodities in excess of N10 billion will be financed this season.”
Dr Jide Olumeko, Director of the SGR said, “We are already seeing evidence of how this system is helping our farmers reduce post-harvest losses. Today’s demonstration shows that we have chosen the right partners in AFEX.”
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. 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.