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ABUJA SECURITIES AND COMMODITY EXCHANGE IN LIMBO

By NBF News
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The circumstances that led to its change of name and functions arose from high-wire politics of the time. The leaders of corporate finance who controlled the Nigeria Stock Exchange were skeptical about a parallel stock exchange near the seat of power and the influence that could accrue to it. So, they persuaded former President Olusegun Obasanjo to disallow it from operating. The hostility was led by the then powerful NSE president, Ndi Okereke-Onyiuke and, in no time, the government succumbed and, at the 32nd meeting of the Federal Executive Council (EXCOF) of August, 2001, ASCE was born and became a parastatal under the Ministry of Commerce and Industry.

Before then, however, the organization enjoyed a robust and functional relationship with its promoters—the CBN, NICON, BOI (NIDB), Nigeria Re and NBCI. But, immediately the new policy was announced, these stakeholders became reluctant to fund it. Between 2001 and 2003, the government did not fund the ASCE and did not give it any other form of assistance.

Trading in commodities requires transactions in agricultural produce, solid mineral products, energy and financial instruments. It was also conceived to enhance the capital market, organize it to conform to quality, streamline spot operations and, eventually, develop it into a trading warehouse where produce are received and 'sieved' for quality. The ASCE was also conceptualized to include electronic floor-based trading, negotiated trading and internet trading with the possibility of the traders doing so from the comfort of their homes and offices. This meant heavy investment in information and communications technology, (ICT) and its accompaniments like servers, PCs and softwares which the ASCE did. But all these items are now obsolete. A massive revival of the exchange, when the government deems it fit, would mean doing away with some of them.

At the peak of its operations, the exchange had 70 staff of different categories. It had technical collaboration with China's Zhengzhou Commodity Exchange and applied what it called the Zhengzhou model. All these have (almost) been confined to the dustbin. The management staff underwent technical training in India, China, South Africa and USA in commodity exchange. But, now that their brains lie fallow, without practicalising their knowledge and skills, I will not be surprised, if, and if the exchange resurrects; their knowledge is useless. Surely, there would be need for training, but, before then, why can't the Federal Government put the exchange to use?

What about the 70 employees. I do not know whether they still work there. If the exchange is not functional then, what is the rationale for keeping them at government expense? But sacking them will only add to the already bloated labour market. And we must note that many countries operate the commodity exchange. Even a war-ravaged Ethiopia, and others like Uganda, Kenya operate it! So why is it impossible for us? Why do we allow politics to becloud our judgment even when such decisions are not in the public interest?

Farmers suffer from ASCE's inactivity because their produce rot away or are sold at give-away prices because there are no storage facilities or government's regulatory mechanism to protect them. An operational ASCE would have standard commodity warehouse, bulking of produce wholesale that ensure prices appreciate and make credit facilities available to farmers. But, for now, harvest time is boom time and the remaining months of the year is gloomy.

Meanwhile, the Ministry of Agricultural which, ordinarily, should work with the ASCE to build confidence in the market through quality, actually sabotages its operations because there is no government policy to compel them to procure grains through ASCE. Therefore, officials of the ministry only issue LPOs which, at best, improve the lives of contractors, to the detriment of poor farmers, while quality control suffers.

These anomalies must not continue. The National Assembly should enact laws to compel relevant government agencies like NEMA and the Federal Ministry of Agriculture that buy bulk commodities to process same through the ASCE. I understand that a bill to that effect is being worked out at the presidency. The presidency should hasten this and lobby the legislators to speedily pass it when it gets to them. The resultant Act will make it mandatory for the agencies to patronize ASCE.

It is anti-economy for the government to abandon an otherwise laudable trading platform for agricultural produce because investments already in place will go down the drain. The way out is to ensure that the ASCE operates fully and establish legal and regulatory framework for its success as an intervening agency in commodities and security transaction. Above all, the ASCE requires the buy-in of the private sector. Export Commodities such as cocoa, gum Arabic, sesame seed and others, should not be exported without ASCE's clearance. This will guarantee revenue and quality. However, in a government- backed economy like ours, these are only possible if government acts responsibly towards ASCE.

Government has been paying lip service to diversifying our mono-cultural economy which relies heavily on crude oil. Its pronouncement may be a pipe-dream if commodity market of agricultural produce and solid minerals is not taken seriously.

'These anomalies must not continue. The National Assembly should enact laws to compel relevant government agencies like NEMA and the Federal Ministry of Agriculture that buy bulk commodities to process same through the ASCE.

I understand that a bill to that effect is being worked out at the presidency. The presidency should hasten this and lobby the legislators to speedily pass it when it gets to them.'