BY BABAJIDE KOMOLAFE

African countries can benefit immensely from well-regulated derivatives commodity exchanges – which in turn could provide a useful tool for Africa’s development,” said African Development Bank (AfDB).

Manager, Regional Integration and Trade, AfDB, Mrs. Moono Mupotola,  said this in an interview ahead of the bank’s sponsored Pan-African Workshop for Regulators of Derivatives and Commodity Exchanges, which commenced on Wednesday in Gaborone, Botswana.

Explaining the rationale for the workshop, she said, “At the AfDB, we believe that efficient and well-regulated derivative and commodity exchanges are a key component of the overall commodity and capital market development in Africa. And it was with this in mind, that the AfDB chose to take the lead in organising this event.

“This is really in line with the Bank’s role as a catalytic agent at the heart of Africa’s capital and financial markets. We are a knowledge broker, you understand, and this workshop gives us an opportunity to promote innovative ideas and discourse on best practices on this subject across the continent. We hope that participants will leave with a better understanding of the benefits that arise from commodity exchanges and the types of structures and regulations that can revolutionise African capital and commodity markets.”

Dismissing the apprehension about derivatives following the global financial crisis, she said, “Well, this is true and we have to understand that in the aftermath of the global financial crisis which originated in 2008, there has been significant debate at global, regional and national levels on the causes of the crisis, and the role played by different financial instruments, regulators and so on.

“While forms of derivative financial instrument may have played a part in causing or exacerbating the crisis, it has also been recognised that derivatives are important as risk management instruments for commodity chains, companies, banks, financial institutions and investors that can actually enhance the stability and robustness of financial systems, as long as they are structured and regulated in an appropriate manner.