EGYPT – The Egyptian government is in the process of establishing first commodity exchange company in country to control the prices of basic commodities such as wheat, rice, oils and sugar.
This is according to an annual report on the Ministry of Supply and Internal Trade’s achievement which was present to the country’s Cabinet in December this year.
According to the report, the new exchange aims at shrinking the circle of commodity trading from the source to the consumer.
The Ministry of Supply and Internal Trade says shrinking this circle will save on the transportation cost, which represents 30% of the total cost of goods.
In the new exchange company, farmers’ products will be collected, classified and made available for all dealers on the exchange platform in a way that contributes to increasing the competitiveness of small farmers and producers.
Egypt’s Minister of Supply and Internal Trade Ali Al-Meselhi in a statement said that investments of LE40 billion have been injected to establish 19 logistic and commercial zones, including two completed areas in Gharbia and Beheira governorates, Egypt’s Delta.
It is expected that the new projects would provide more than 400,000 direct and indirect job opportunities to Egyptian citizens.
If successful, Egypt will become among a few African countries that have existing commodity exchange companies.
In Nigeria, AFEX commodities Exchange Limited has been existence for nearly 6 years now, and has been key in supporting securitization of Nigeria and West Africa’s agricultural products.
The company boasts of having 106,000 farmers and traded over 126,000MT of commodities with a total turnover of NGN14.1 billion.
The company also recently launched ComX, a digital commodities training platform designed for trading in assets backed by commodities.
Back to the Egyptian exchange, despite plans for its launch being in high gear, some people remain concerned about how the exchange will operate as the government usually prices the commodities it purchases from domestic producers.
Either way Reuters reports that the exchange go live in the first have of 2021 and will have 91 million Egyptian pounds (US$5.78 million) in capital.
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