A 2-day conference on African Commodity Exchanges has ended in the Ethiopian capital, Addis Ababa with the call for an Africa wide commodity exchange as well as more exchanges in African nations.
At the heart of this conference, even though not upfront, was the key role that information and communication technologies (ICTs) are playing in transforming businesses within the agricultural sector in Africa. The success stories surrounding the operation of the Ethiopian Commodity Exchange (ECX) system attest to the fact that ICTs can be enabling factors in almost every sector once the necessary steps are taken to integrate these technologies into the sector.
“A sleepy eyed farmer miles away from the nearest road braves the morning chill to load his donkeys with his lentil harvest. On his way to market he checks his mobile to see if the network is reaching him – because receiving a text message now from the Ethiopian Commodity Exchange (ECX) could save him hundreds of birr,” said the former World Bank economist Eleni Gabre-Madhin who is the CEO of the Ethiopia’s state-owned commodity exchange.
According to Dr. Gabre-Madhin, ECX is as much an ICT revolution as it is an economic transformation. The platform is a communications technology, from the real time price tickers found across the country to the Interactive Voice Recognition mobile telephony for rural farmers, that makes the exchange work. ICT applications currently being used to facilitate exchange of commodities and make information accessible to the users include over 100 price tickers, 20 trading centers, 50 warehouses, 2000 market information kiosks, and 50 data display boards.
Dr Gabre-Madhin stated that access to price information allows farmers to maximize profits and if farmers can get the same information about the national market trends that well-established and endowed exporters and processing firms have, that changes how the game is played. She concluded that with the ECX, the share of the final export price that now goes back to the farmer has gone up from something like 38% to close to 70%.
The conference which was co-organized by ECX and UNDP brought together participants from about 14 Africa countries including Ghana, Zambia, Rwanda, Nigeria, Zimbabwe and South Africa with market regulators, policy makers, national and international banks, the US securities and exchanges commission, development institutions, investors, farmer organizations and technology companies.
But while the ECX is being held up as a model, many other African countries disagree with the concept of states controlling the market. But the Ethiopia’s top government economist Newal Gabre Ab insisted that every country is different when it comes to economic policy and in Ethiopia, where farmers are among the poorest in Africa, the success of the ECX is the result of careful state planning.