Post by Trade Coach on Mar 6, 2021 10:57:27 GMT 1
Big Boost For Agribusiness Agri-SMEs in Nigeria: AFEX Raises $50 Million
AFEX Commodities Exchange Limited (AFEX), a private commodities exchange company in Nigeria, has recently announced the establishment of the first Warehouse Receipt Backed Commercial Paper in Africa.
The paper has tech-enabled operations and a 24-hour fast cash turnaround for borrowers. AFEX disclosed this in a statement it issued recently in Nigeria.
The $50 million Agri-SMEs fund is expected to be used to bridge the gap for funding between lenders and borrowers in the Nigerian agricultural sector with a commodity backed instrument. This type of instrument is coming into the country for the first time through AFEX.
The Chief Executive Officer (CEO) of AFEX, Mr. Ayodeji Balogun, stated “The AFEX financing deal will help eradicate the high cost of procurement incurred by processors by deploying a discounted value of a warehouse receipt distributed among five leading players in the food and beverage, trading, Poultry and Animal FEED segments in Nigeria”.
He also disclosed that “The receiving companies are top 10 players in their respective segments. They have now been enabled access to a tool for managing price volatility, enabling up to 30% direct savings on prices”.
The CEO also said “With our vision to reach a cumulative total of over $5 Billion in investment to the agricultural sector over the next five years, this financing deal is right on track to achieve this goal”.
He also disclosed that as AFEX moves towards building a derivatives market in Africa, they want to be able to reduce the price risk for stakeholders by enabling them to hedge their positions and trade in commodity derivatives.
A highly welcome development, AFEX will provide low-risk working capital for stakeholders in the agricultural sector in such a manner that it will be transparent and with a very high return on investment to the investors.
Investors the world over are generally interested in transparency in activities and at the same time a good return on their investment.
AFEX is currently assuring all in the agricultural sector of The Nigerian economy exactly that.
The company by acting as a licensed commodities exchange and a warehouse receipt system operator, it deploys a warehouse receipt system and collateral management infrastructure to increase market confidence for both lenders and borrowers.
Stakeholders have been complaining about the problem of underfunding in the Nigerian agricultural sector. Therefore, this system of warehouse receipts, which can be transformed from commodities to a financial asset and listed under the borrower’s portfolio on the AFEX trading platform, will create a type of funding structure that will address underfunding in the nation’s agricultural sector.
As this warehouse receipt system is linked to financiers, the system allows financiers value and marks the commodities’ price to market on a real-time basis.
Contained in a similar statement issued by AFEX Commodities Exchange Limited, is that it has signed memorandum of understandings (MOUs) with FMDQ holdings Plc and the Dubai Gold and Commodities Exchange (DGCX) to develop products that would deepen the Nigerian Capital Market and provide new market opportunities for commodities traded in both exchanges.
The company disclosed that the collaboration with Dubai Gold and Commodities Exchange (DGCX) covers a number of activities, these range from sharing of knowledge between both parties to commodity contract design, and the listing of Shari’ah Gold products.
Please note that the DGCX Spot Gold Contract – which is Shari’ah compliant, provides an opportunity for Islamic Funds and Investors in and outside Nigeria to diversify their portfolio efficiently by investing in gold.
And most importantly, agricultural commodities from Nigeria can easily find a route to international markets with the commodities being traded fairly and transparently on the exchanges.
These collaborations are significant and are important to reviving the moribund commodities exchanges in Nigeria. It will also serve as a gateway to the Middle East export market.
AFEX Commodities Exchange Limited (AFEX), a private commodities exchange company in Nigeria, has recently announced the establishment of the first Warehouse Receipt Backed Commercial Paper in Africa.
The paper has tech-enabled operations and a 24-hour fast cash turnaround for borrowers. AFEX disclosed this in a statement it issued recently in Nigeria.
The $50 million Agri-SMEs fund is expected to be used to bridge the gap for funding between lenders and borrowers in the Nigerian agricultural sector with a commodity backed instrument. This type of instrument is coming into the country for the first time through AFEX.
The Chief Executive Officer (CEO) of AFEX, Mr. Ayodeji Balogun, stated “The AFEX financing deal will help eradicate the high cost of procurement incurred by processors by deploying a discounted value of a warehouse receipt distributed among five leading players in the food and beverage, trading, Poultry and Animal FEED segments in Nigeria”.
He also disclosed that “The receiving companies are top 10 players in their respective segments. They have now been enabled access to a tool for managing price volatility, enabling up to 30% direct savings on prices”.
The CEO also said “With our vision to reach a cumulative total of over $5 Billion in investment to the agricultural sector over the next five years, this financing deal is right on track to achieve this goal”.
He also disclosed that as AFEX moves towards building a derivatives market in Africa, they want to be able to reduce the price risk for stakeholders by enabling them to hedge their positions and trade in commodity derivatives.
A highly welcome development, AFEX will provide low-risk working capital for stakeholders in the agricultural sector in such a manner that it will be transparent and with a very high return on investment to the investors.
Investors the world over are generally interested in transparency in activities and at the same time a good return on their investment.
AFEX is currently assuring all in the agricultural sector of The Nigerian economy exactly that.
The company by acting as a licensed commodities exchange and a warehouse receipt system operator, it deploys a warehouse receipt system and collateral management infrastructure to increase market confidence for both lenders and borrowers.
Stakeholders have been complaining about the problem of underfunding in the Nigerian agricultural sector. Therefore, this system of warehouse receipts, which can be transformed from commodities to a financial asset and listed under the borrower’s portfolio on the AFEX trading platform, will create a type of funding structure that will address underfunding in the nation’s agricultural sector.
As this warehouse receipt system is linked to financiers, the system allows financiers value and marks the commodities’ price to market on a real-time basis.
Contained in a similar statement issued by AFEX Commodities Exchange Limited, is that it has signed memorandum of understandings (MOUs) with FMDQ holdings Plc and the Dubai Gold and Commodities Exchange (DGCX) to develop products that would deepen the Nigerian Capital Market and provide new market opportunities for commodities traded in both exchanges.
The company disclosed that the collaboration with Dubai Gold and Commodities Exchange (DGCX) covers a number of activities, these range from sharing of knowledge between both parties to commodity contract design, and the listing of Shari’ah Gold products.
Please note that the DGCX Spot Gold Contract – which is Shari’ah compliant, provides an opportunity for Islamic Funds and Investors in and outside Nigeria to diversify their portfolio efficiently by investing in gold.
And most importantly, agricultural commodities from Nigeria can easily find a route to international markets with the commodities being traded fairly and transparently on the exchanges.
These collaborations are significant and are important to reviving the moribund commodities exchanges in Nigeria. It will also serve as a gateway to the Middle East export market.
