AFEX, one of Nigeria’s and Africa’s leading commodities players, last week in Lagos, unveiled a new pricing methodology for its commodities.
Speaking at the second edition of the AFEX CEO Breakfast Session tagged, ‘The Convergence Of Commodities And Capital Markets: Unlocking Liquidity For A $1trillion Market’, the President/CEO AFEX Nigeria, Akinyinka Akintunde, disclosed that the implementation of the price methodology would fill a gap in formalising participation in the Nigerian commodities ecosystem, as the firm doubles down on investor education and protection, while enhancing price discovery and eliminating price gaps across the different boards on the commodities exchange.
He noted that AFEX commodities exchange pricing methodology is a framework used by the exchange to transparently communicate the prices of the commodities that are available for trade, adding that previously, the pricing methodology aggregated prices across all markets and represented them differently in each of the exchange’s boards.
He said: “The new methodology will unify these prices from different markets and boards to generate a homogenised price per commodity. We have launched initiatives to strengthen data availability and accessibility for the commodities market in the country over the years, which is a core fundamental for a robust and vibrant market. Improving our thinking around pricing is a commitment to transparency, and to ensuring that stakeholders understand the pricing and valuation of these commodities, while being able to access the data for decision-making.”
He revealed that clients would be exposed to three boards – cash settled market board, OTC board and Dawa board – saying these boards would enable investors and value chain players to hedge risks, diversify their portfolios and get their orders fulfilled.
Akintunde disclosed that in the coming months, investors should also expect the introduction of a fixed income board and derivatives trading board on the upgraded trading platform, stressing that AFEX market turnover currently stands at $300 million with more education drives planned to serve as a catalyst for the continued development of the commodities market ecosystem in Nigeria.
The Managing Director of Sahel Capital, Mezuo Nwuneli, noted there was a great need of unlocking finance for the $1 trillion commodity market, adding that food inflation and global trends point to the need to build resilient food supply chain systems, and commodity investment serves as the vehicle to bolster Africa’s regional supply chains.
“By leveraging private sector and foreign investments, we can unlock value for the agriculture value chain and hedge against creeping inflationary pressures,” he said.
