CBN cancels commodity exchange privatisation, invests N50 billion

In the next 90 days, the Nigerian Commodity Exchange (NCX) will be repositioned to boost production of farmers. This will give farmers direct access directly to the buyers at the exchange as it eliminates arbitrage currently being enjoyed by middlemen.

Under the repositioning plan, the Central Bank of Nigeria (CBN), which is the majority shareholder, said it will inject N50 billion to bring the exchange to standard to play its role in agriculture development.

Consequent to this plan, the planned privatisation of the NCX has been cancelled.

The Governor of the CBN, Mr. Godwin Emefiele, disclosed this at the inaugural meeting of the steering committee set up to reposition the exchange. He heads the committee.

Other members of the committee include representatives from the Nigeria Sovereign Investment Authority (NSIA), the African Development Corporation (AFC), the federal ministries of Finance, Budget and National Planning; Industry, Trade and Investment and Agriculture and Rural Development.

The CBN boss said the investment would be made through the Infrastructure Corporation (Infraco) in collaboration with other investors such as the Nigeria NSIA and AFC.

The move, according to the CBN boss, was to make the exchange functional in order to halt the arbitrage by middlemen under whom Nigerian farmers have suffered for decades.

Emefiele also announced the approval of President Muhammadu Buhari to halt the on-going privatisation of the exchange as the process was found to have become an obstacle rather than a solution to the problems of farmers.

He revealed that the CBN has been engaged the management of NCX and other key stakeholders on strategies to revamp the exchange and upgrade its facilities, similar to what exists in other African and western countries where commodities exchanges are key drivers of economic growth.

“It is against this backdrop that the President considered and approved a proposal for the repositioning of NCX in order to consolidate on the government’s efforts aimed at strengthening the agriculture value chain, part of which includes connecting farmers to markets beyond their immediate environments,” he said.

According to the governor, the highlights of the Presidential Approval were, “That the CBN, as the majority shareholder of NCX, should collaborate with NSIA and AFC, under the Infraco Structure, to develop and implement a strategic repositioning plan for the NCX to make it an efficient world-class commodity exchange.

“The revalidation of CBN’s 59.7 per cent majority shareholding in NCX to enable it to implement far-reaching measures, which include reconstitution of NCX’s board and board committees, the appointment of Chairman by the CBN, and an investment of at least N50 billion through the InfraCo structure.

“That CBN is expected to engage the Nigeria Postal Service on possible utilisation of its assets to develop model warehouses across the federation.”

The NCX was originally incorporated as a stock exchange on June 17, 1998. It commenced electronic trading in securities in May 2001 but was later converted to a commodity exchange on August 8, 2001, and brought under the supervision of the Federal Ministry of Commerce (now Ministry of Trade and Investment).