By FRANKLIN ALLI
The Director General,Nigeria Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), John Ismede, says commodity exchange  requires  legal backing  to succeed in the country like its counterparts in  USA, China, Japan and Malaysia.

Commodity Exchange is a form of deregulated market. It is an enlightened, organised and free market system in which agricultural products could be traded on very large scale. It provides an avenue for the bulk sales and purchases of any tradable agricultural commodity all year round

It will be recalled that Abuja Securities and Commodities Exchange (ACSE) is inactive at the moment, a situation which Mallam Lamido Sanusi, governor, Central Bank of Nigeria (CBN) has blamed on inadequate funding and lack of clarity in the Exchange’s corporate governance.

Reacting, the NACCIMA DG told VANGUARDexclusively that Commodity Exchange is not working in Nigeria because “There is a complete lack of experience in this type of trading which is virtually non-existent in any other part of Africa. Besides, good understanding of the operation of a Commodity Exchange is limited to a negligible segment of the Nigerian populace. Therefore, effective public awareness about this marketing system is a pre-requisite for the successful operations of the Exchange in Nigeria.”

He noted that for commodity exchange system to work in Nigeria, the onus lies on the readiness of the commodity producers, the financiers, the Banks, the Insurance companies and the mediating institutions to follow and adopt the operation of this system.

He believes Nigeria can succeed if the present Board of the Commodity Exchange set up in Abuja is prepared to hire well trained and dedicated staff for the initial take off.

He also called on government to quickly set up Commodity Exchange Market that would be private sector driven.

Said he: “Government roles, therefore, are as follows; Promulgation of decrees to give legal backing to the bye-laws of the exchange. The bye-laws must be properly discussed, canvassed and understood by the interest groups. Taking a small (about 25 percent) equity share of the Commodity Exchange Clearing Banks (CECB) through development finance institutions like Bank of Industry, BOI.

*Setting up the Commodity Exchange Commission as the apex regulatory body of the exchanges to be midwifed by Securities and Exchange Commission (SEC) which is to register and supervise the brokers that can operate here.

*Extending long credit lines to the Commodity Exchange Clearing Banks (CECBs), merchant and commercial banks for onward lending to private companies to build infrastructure such as grain silos and other storage facilities, grain rail cranes etc, to support the market.

*Licensing of commodity brokers, commodity exchange clearing banks and other E related finance institutions.

*Intervening in the market from time to time through the buffer stock system, credit guidelines, foreign exchange market, fertilizer and input subsidy to stabilize the market by creating appropriate equilibrium between producer prices and production costs. This is also replaceable with farmers’ incentives.