Govt budgets GH¢15m to support trading on GCX
Trading on the proposed Ghana Commodity Exchange (GCX) Market, which is aimed at providing a ready market for grains and cereal producers, is expected to commence this year, following government’s decision to provide GH₵15 million to support its establishment.
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The Ghana Commodity Exchange (GCX), which will operate on a Warehouse Receipt System modelled after a similar one in Ethiopia, was expected to take off by December 2012 but could not materialise due to factors which included a change in leadership at the trade ministry.
A new deadline of June 2016 was also missed due to the lack of support from some stakeholders, but the Project Coordinator, Mr Robert Dowuono Owoo, has told the GRAPHIC BUSINESS that it was confident of commencing trading on the GCX by end of this year.
“We are through with the design of the exchange and we have now got to the stage where the exchange needs to be implemented. The implementation involves setting up of the exchange itself and the components that make up the exchange including educating farmers on how to benefit from the use of the exchange, capacity building for various market actors along the value chain and the actual physical setting up of the trading platform,” he stated.
“Government has been true to its word of facilitating the establishment of the GCX and has made a provision of GH₵15 million for it in the budget. We are now waiting for the money to be made available for the design to be implemented so that we can have a functional GCX by the end of the year,” he added.
Support from stakeholders
Mr Owoo also pointed out that the exchange now had the full support from all of its stakeholders who initially perceived it as a threat to their businesses.
“Some of them have been in this business for a long time and they saw the coming into being of the exchange as a competition to their businesses. They thought the exchange was going to engage in the buying and selling of agricultural products,” he stated.
“However, after engaging them, they have all decided to give their full backing to the programme,” he added.
He said the stakeholders were now convinced that the project would rather create a platform for them to improve their businesses and not compete with them.
The stakeholders include producers, aggregators, traders, wholesalers, processors and other stakeholder groups who interact with market actors in the value chain process of the commodity market.
Benefits of the GCX
A commodity exchange is an arrangement where various commodities and derivative products on commodities are traded. It is similar to an equity market, but instead of buying or selling shares, one buys or sells commodities. Commodity exchange is one of the oldest prevailing markets in human history.
And the Warehouse Receipt System receives grains and stores them after categorising them by quality, weight and delivery location, and assigning weight to them.
Warehouse receipts issued at the warehouse operated through the exchange are stored in a central depository where title transfers are done.
Ghana’s commodity exchange, among other things, is expected to end the cycle of poverty among Ghanaian farmers, especially smallholder farmers due to post-harvest losses.
It has been identified as having a huge potential to improve the functioning of agriculture by enhancing price transparency, leading to increased farm output and incomes.
The GCX, when established, will also promote agricultural investment, enhance productivity, encourage market access and fair returns for smallholder farmers and facilitate the formalisation of informal agricultural trading activities.
Correlation between GCX and PFAJ
The Project Coordinator also noted that there were lots of things happening in the agricultural space that directly impacted on the GCX.
“There is a direct correlation between the GCX, the warehouse facility and the Planting for Food and Jobs (PFAJ) programme which was recently launched by the President. The PFAJ has components that will provide farmers with inputs like seedlings and fertilisers and provision of warehouses to ensure that we have production level for some selected cereals and vegetables going up,” he mentioned.
