INTEVIEW-Ethiopia plans commodity exchange by end 2007
June 7, 2007 (ARUSHA) — Ethiopia plans to have an electronic commodities exchange that will start trial runs by the end of the year to boost trade in its major crops, a director spearheading the exchange said on Thursday.
“What we hope to do first is to have a first launch of some kind of a pilot by the end of 2007. We hope to have a starting bell by December 2007,” Eleni Gabre-Madhin, programme director with Washington DC- based International Food Policy Research Institute (IFPRI), told Reuters.
Gabre-Madhin said the exchange, to be called the Ethiopia Commodities Exchange, would first target six crops, among them coffee, sesame seed, maize and wheat.
Ethiopia is Africa’s largest coffee producer and the birthplace of the bean. It exported 183,000 tonnes worth $427 million in 2005/06.
She added that the exchange would first offer spot trading and later have futures trading to help reduce price risks.
“That’s something we are very much interested in introducing, maybe not at the very beginning because there are enough challenges existing in market discipline,” she said.
The exchange, being set up by the Ministry of Agriculture in collaboration with IFPRI and private commodity businesses, was initiated at a cost of $10 million in September 2006.
“The biggest part of the investment is really trying to get a sold trading system, an electronic trading system,” Gabre-Madhin said.
The project will also involve setting up commodity certification and warehousing facilities.
Gabre-Madhin said that among the challenges they faced was the short period given for the exchange to be fully operational by 2008, and changing the impression that the exchange was being established to cut certain traders out of the markets.
“Others are worried whether this is going to lead to gambling and speculation,” she added.
Gabre-Madhin said once the exchange was operational they hoped to link it with exchanges outside Ethiopia like China, its largest buyer of sesame seed.
She was speaking at the sidelines of the just-concluded TEDGlobal technology and design conference.
(Reuters)