Assessing their new warehousing project, which enables Nigerian farmers, cooperatives and traders to safely store their produce at accredited warehouses and access financing, the Africa Exchange Holdings (AFEX) said the two months of operation of the project was a record speed in public private partnerships.
The assessment followed a technical review of the pioneering electronic warehouse receipt platform by the Nigerian Strategic Grains Reserve (SGR) and the Federal Ministry of Agriculture and Rural Development (FMARD).
The platform was deployed by AFEX, which is the pan-African commodity exchange company founded by Tony Elumelu, Chairman of Heirs Holdings; Nicolas Berggruen, Chairman of Berggruen Holdings; and Jendayi Frazer, President of 50 Ventures.
In a press statement, organizers said “When fully operational, the new warehousing project will significantly reduce the risk of lending to stakeholders in the agriculture sector, by providing secure storage and real time online tracking of warehouse receipts; increasing speed and reducing transaction costs.”
Commenting on the project, Tim Shortley, Chief Operating Officer at AFEX, said: “The timing for the project is ideal because trading and storing of harvested commodities just started and the system is ready. We have launched the system in the northwest region of Nigeria; however, we plan to scale across other states in 2014 so farmers across Nigeria can feel the benefits of the warehousing project.
“We hope that agricultural commodities in excess of 10 billion Naira (about US$ 67 million) will be financed this season.”
Dr. Jide Olumeko, Director of the Nigerian Strategic Grains Reserve (SGR), said: “We are already seeing evidence of how this system is helping our farmers reduce post-harvest losses. Today’s demonstration shows that we have chosen the right partners in AFEX.”
The two-year pilot phase of the warehouse receipt system covers seven states, mostly in northern Nigeria, where agriculture is by far the largest economic sector – Kano, Kaduna, Katsina, Zamfara, Kwara, Gombe and Oyo.
Organizers said Nigerian farmers may now use receipts for their produce as collateral for loans. This will control price volatility due to the availability of buffer stock, enabling farmers to sell produce at better price points.