Commodities Market Hindered by FX Policy, Infrastructure, and Insecurity

The Managing Director of Sahel Capital, Mezuo Nwuneli, recently highlighted some key hurdles impeding the commodities market in Nigeria. Speaking at the AFEX CEO Breakfast event in Lagos, where he served as the keynote speaker, Nwuneli pointed out the challenges of an unclear foreign exchange policy, inadequate infrastructure, and persistent security issues.

The discussion at the event revolved around the topic, ‘Convergence of Commodities and Capital Markets: Unlocking Liquidity for a $1tn Market,’ referencing a 2013 World Bank report titled “Growing Africa: Unlocking the Potential of Agribusiness,” which projected that the continent’s commodities market could reach $1 trillion by 2030.

Nwuneli emphasized that the Nigerian government needs to prioritize three crucial areas to harness the potential of the commodities market effectively. These include establishing a transparent and predictable exchange rate policy, improving road infrastructure across different regions, and addressing security concerns to instill investor confidence.

In the same vein, the CEO of AFEX Nigeria, Akinyinka Akintunde, addressed the challenges within the agricultural sector, noting the scarcity of infrastructure necessary for efficient utilization and proper allocation of resources. AFEX aims to bridge this gap by developing appropriate infrastructure and fostering collaboration among key players.

Additionally, AFEX introduced an updated pricing methodology for its commodities exchange business unit during the second edition of the AFEX CEO Breakfast Session. The new methodology, effective from November 1, aims to streamline price discovery and eliminate discrepancies across various boards on the Exchange.

Dr. Afolabi Olowookere, the MD of Analysts’ Data Services and Resources, discussed the implications of the Central Bank of Nigeria’s recent decision to lift the ban on sourcing foreign exchange for the importation of 43 items from the official market. He underscored the potential consequences for domestic companies, emphasizing the need for them to bolster their competitiveness.

In light of the market developments, the article concludes by mentioning the CBN’s action last Thursday in lifting the ban on sourcing forex for the importation of the mentioned 43 items from the official market.