After missing two deadlines, trading on the Ghana Commodity Exchange Market (GCX), which seeks to provide a ready market for commodities, will finally commence today.
The Ghana Commodity Exchange (GCX), which will operate on a Warehouse Receipt System modelled after a similar one in Ethiopia, was expected to have taken 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 after six years of wait the GCX will be launched today.
The Chief Executive Officer of the GCX, Dr Kadri Alfah, in an interview with the GRAPHIC BUSINESS on November 2, in Accra said the GCX would provide an electronic market system that would link buyers and sellers of commodities in the country.
He said the commodities could be agricultural products, minerals and petroleum products.
“The exchange will assure them and guarantee them of the quantity, quality and the delivery time,” he stated.
He said the exchange would provide an end to end solution to some of the challenges of farmers, key among them being post-harvest losses.
The CEO also added that “our market system currently only supports the hoe and cutlass production system and this is why it has become very difficult to move commodities swiftly from areas of production to consumption areas.”
“During the harvest season, there is a gloss which affects prices and during the low moments too, the prices go high.
This is so because we do not have a system that will enable us to move these commodities and store them appropriately to ensure that at the time that we need them, we can distribute them efficiently,” he explained.
He said the GCX was, therefore, coming in to solve this problem.
He said the exchange would use technology to ensure that it supports a market system that was efficient and was able to move commodities very quickly.
Complement market system
Dr Alfah also indicated that the GCX would complement what was already being done in the market systemt.
He said there was a market system that was craving for alternatives and that was what the GCX would provide.
“The exchange will operate alongside the market system that is already in place.
It is up to us to articulate the benefits of the exchange to the market,” he noted.
Touching on its business model, he said the products to be traded on the exchange would all be standardised and graded to meet certain requirements.
“They will be graded, weighed and packaged to increase their market appeal and stored for a certain period of time,” he noted.
He said that would give farmers time to be able to store and sell their products when the prices were right.
“We will also test the moisture of the crops and other micro-organisms to make sure the products meet the standard for storage.
We will then weigh them and put them in a package to ensure its safety.
We will then give the farmer a certificate which is a title of ownership,” he explained.
Dr Alfah also noted that the GCX would be operating its own warehouses.
“We have our own warehouses at Kumasi, Wenchi, Tamale, Adwira, and Sandema, and we have technical staff that operates these warehouses.
“We work closely with the Ghana Standards Authority, the Food and Drugs Authority, Ghana Grains Council and all actors who are in the business of warehousing and commodity trading to make sure the warehouses conform to international standards,” he added.
The CEO also indicated that the warehouse certificate could be used as collateral by the farmers.
“We have banks and financial institutions that are working with us and are prepared to accept the warehouse receipt as collateral from the farmers,” he stated. — GB