CBN takes lead role to revive commodity exchange, injects N50bn

THE Central Bank of Nigeria (CBN) has made public the key highlights of the Inaugural Meeting of the Steering Committee on the repositioning of the Nigeria Commodity Exchange (NCX); which results in the Bank taking a lead role in the governance of a Securities and Exchange Commission (SEC) regulated entity.

Following the approval to restructure, CBN will inject N50 billion in the sub-optimally performing state-owned institution in a new plan to make it alive to its responsibilities.

The CBN injection that will increase its equity in the NCX, is compelled by the cancellation of the planned sale of the lame-duck Exchange in a new move to turn it around in 90 days and be able to provide a robust platform for the sale of agricultural commodities that are the end product of the various intervention of the apex bank such as the Anchor Borrowers Programme.

The NCX) has battled inability to catalyze agricultural production due to several structural and idiosyncratic challenges, and the government believes the new measure will turn it around and bring it up to compete with the world best.

It will be recalled that President Muhammadu Buhari in addition to the approval of the restructuring of the NCX also endorsed an investment of at least N50 Billion through the InfraCo structure to reposition the commodity exchange, while also ordering the CBN as a major shareholder of NCX, to collaborate with Nigeria Sovereign Investment Authority (NSIA) and Africa Finance Corporation (AFC), under the Infraco Structure, to develop and implement a strategic repositioning plan for the NCX to make the NCX an efficient world-class Commodity exchange.

Under the new arrangement, Godwin Emefiele of the CBN will chair a Steering Committee (SteerCo) that will have as members, representatives of NSIA, AFC and that of the Federal Ministries responsible for Finance, Budget & National Planning; Industry, Trade and Investment; and Agriculture and Rural Development, to implement the plan to overturn the moribund NCX.

The fresh N50 billion investment from the CBN will increase the bank’s 59.7 per cent majority shareholding stake in NCX, to enable it to implement far-reaching measures, which includes reconstitution of NCX’s Board and Board Committees, and also, the appointment of Chairman by the apex bank

The new arrangement also incorporates the Nigeria Postal Service that will provide some its assets across the federation as model warehouses while the SteerCo is empowered to co-opt any other Ministry, Department and Agency of government for the effective implementation of the Strategic Turnaround Plan.

Emefiele said the new plan came into being owing to the unfortunate arbitrage opportunities which the government has noticed in the private sector arrangement and which has become an obstacle in moderating food prices in Nigeria.

The CBN governor said the bank has 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 a key driver of economic growth.

Emefiele noted that despite efforts by the government and the CBN itself, “there are still significant challenges within the Nigerian agricultural commodities value chain that would need to be addressed, in order to accelerate investment and productivity in the sector”.

The challenges include poor infrastructure and logistics which impede the movement of produce from farm to market and/or processing centres resulting in massive revenue losses to farmers; limited storage and preservation facilities; lack of adequate liquidity to support offtake of agricultural goods; unavailability of pricing information to market participants and the activities of middlemen who currently aggregate commodities with the sole aim of manipulating prices for selfish gains

Other highlights are that : Revalidation of CBN’s 59.7 per cent majority shareholding stake in NCX giving it the responsibility to reconstitute NCX’s Board, Board Committees and appoint Chairman; CBN will engage Nigeria Postal Service (NIPOST) on possible utilization of its assets to develop model warehouses across the federation.

Also, the Steering Committee may co-opt any other Ministry, Department and Agency of government to ensure effective implementation of the Strategic Turnaround Plan.

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