By BUKOLA IDOWU, Lagos
The Central Bank of Nigeria (CBN) has said international buyers of raw and processed agricultural commodities will be able to enter into forward contracts with domestic suppliers once the Nigerian Commodity Exchange (NCX) commences operation in the second half of the year.
Governor of the CBN, Godwin Emefiele made this known in his address at the Zenith Bank 2021 Virtual Export Seminar held yesterday. Earlier in the year, he had announced the decision of the CBN to restructure the Nigerian Commodity Exchange.
The CBN alongside the Nigeria Sovereign Investment Authority (NSIA) were to invest N50 billion to revive the commodities exchange whose history dates back to 1998 when it debuted as the Abuja Stock Exchange.
Whilst noting that the repositioning of the Nigerian Commodity Exchange would help to support greater trade for operators in vital sectors of the economy, Emefiele said the apex bank is working with stakeholders to ensure the take off of the exchange by the second half of the year.
He furthered that the operations of the exchange will enable international buyers of raw and processed agricultural commodities enter into forward contracts with domestic suppliers on the exchange, “and they can be assured of not only the quality of the goods sold through the exchange, but on the expected date of delivery.
“We believe these forward contracts will help to support improved productivity for farmers and agro-processors, it will also help to improve access to credit for these entities using the forward contracts as collateral.”
Emefiele noted that this is part of steps taken to ensure that the country is able to fully take on the opportunities that the full implementation of the African Continental Free Trade Agreement (AFCFTA), is expected to give Nigerian firms.
It is expected that the Nigerian private sector will have preferential access to markets in Africa worth $504.17 billion in goods and $162 billion in services. Asides the commodity exchange, he noted that developing trade portals that could support instant sales of goods manufactured in Nigeria to consumers in other parts of Africa is one aspect that can help to support the creation of jobs in Nigeria and improve foreign exchange inflows for the country.
“Our banks are already playing a significant role in expanding across the African continent. I would like to encourage them to also leverage their presence in other parts of Africa, to support Nigerian businesses seeking to expand into new markets in Africa, by providing trade facilities to those with strong potentials for growth.
“At the CBN we have taken considerable steps to improve the productive capacity of businesses, which would enable them take advantage of export opportunities in Africa. Our intervention programs in the agriculture and manufacturing sectors, are helping to enable businesses expand their scale of production, which is meeting growing domestic demand for goods, but also providing goods for the export market.
“In addition, we have set up a N500bn non-oil export stimulation facility with the Nigerian Export Import Bank (NEXIM). This initiative will also help to enable greater exports of processed agriculture commodities into other markets in Africa and in the global market.
“Improving the business environment in Nigeria is also vital if we are to harness the gains from the AFCFTA. The Central Bank through our Trade Monitoring System portal (TRMS) is also helping to reduce the time it takes to complete the export documentation process, as faster turnaround time could help to reduce delivery time for goods destined for exports, and enable businesses expand their output. Today, businesses can complete their NXP applications on the TRMS portal in 30 minutes relative to two years ago, where it could take as much as two weeks to complete the process.”