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Zimbabwe: Govt Partners Private Sector On Commodities Exchange

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The Financial Securities Exchange Limited (FINSEC), in partnership with TSL Limited and financial services group CBZ Holdings Limited, has established the Zimbabwe Mercantile Exchange (ZMX) in a Public-Private Partnership (PPP) with Government.

This comes as Government puts in place the National Agriculture Policy Framework (NAPF) 2018 to 2030 to guide investments and sub-sector strategies in order to sustainably transform the agriculture sector, which is the backbone of the Zimbabwean economy.

The NAPF has eight pillars that provide the basis for policy objectives and strategic initiatives and pillar six talks of agricultural finance and credit, in which Government sought to resuscitate the Commodities Exchange. The Commodities Exchange initiative is a partnership between Government and the private sector led by FINSEC, TSL Limited and CBZ Holdings.

Its overall goal is to create an environment that enhances the sustainable flow of investment into the agricultural sector towards enhancing productivity and production, ensure food and nutrition security, while promoting national economic growth and development.

According to the private sector partners driving the initiative — FINSEC, TSL and CBZ Holdings — there is urgent need for commodities exchange in Zimbabwe, which will help alleviate some of the problems faced by producers and end users of commodities in the country.

“The ultimate goal is a fully automated, efficient, transparent and credible commodity exchange,” reads part of their document presented to Treasury.

The success of the commodities exchange is anchored on operationalising and automation of the Warehouse Receipt System (WRS). This system, provided by FINSEC, offers an organised market place where agricultural commodities such as grains delivered by farmers to warehouses are recorded and the farmers are issued with Warehouse Receipts.

Case studies from other developing countries have shown that the WRS helps in ensuring an efficient market with a fair price discovery system that gives access to both local and international commodity buyers and better margins for the farmers. It provides an organised market of authorised formal players across the agricultural commodities value chain as well as encourage formalisation of small scale farmers, which will ensure the sustainability of the farming activities, increase in access to credit facilities through collateralisation of agricultural produce and enhance the farmers’ contribution to employment creation, environmental conservation and economic development.