Zimbabwe has approached Malawi’s commodity exchange seeking advice on how to re-establish a similar trade platform, which has been on the pipeline for some time.
This comes at a time when Finance minister Tendai Biti early this month said Treasury would provide $1 million to revive the country’s commodities exchange. Malawi has a vibrant commodity exchange — the Malawi AHL Commodities Exchange.
AHL Commodities Exchange public relations officer Hellen Chabunya told the media during the just-ended Zimbabwe International Trade Fair that they were recently approached by Zimbabwean government officials seeking expertise advice.
“The government of Zimbabwe has been consulting us concerning the setting-up of a commodity exchange similar to ours and we gave our contribution” she said.
A commodity exchange is a market where buyers and sellers trade commodity-linked contracts on the basis of procedures laid down by the exchange.
Such exchanges typically act as a platform for trade in futures contracts, or for standardised contracts for future delivery.
The exchange system was abandoned nearly a decade ago when the Grain Marketing Board (GMB) was given a monopoly to buy wheat and maize.
GMB’s monopoly was removed in 2009 when government liberalised the market.
A private company, MScEX, in 2009 said it was on the verge of setting up a commodity exchange and said it had the green light from two commercial banks that had promised to make US$2 million available.
Despite the announcement, MScEX never came back to brief the market on progress towards the revival of the exchange.
Zimbabwe tried to revive the commodities exchange in the 1990s, but the plan was abandoned a decade later.
GMB has been slow in paying farmers and consequently agriculture production in Zimbabwe has suffered.
The country’s fiscal authorities from 2011 have been saying they were finalising the setting-up of the exchange.
The commodities exchange is expected to ensure efficiency in the marketing of the country’s agricultural produce by eliminating delayed payments to farmers and is expected to assist in the mobilisation of financial resources and ensuring price transparency.
GMB has been the major buyer of maize as well as wheat and a price setter.
Due to capital constraints, the entity has been struggling to ensure timeous payment for the delivered grains.
The exchange is also expected to bring about discipline in the market and a competitive price regime for agricultural produce.
Meanwhile, Agriculture and Mechanisation minister Joseph Made told the media during a tour of agricultural stands on Friday that a Malawian delegation was expected in the country this week to learn about processing of flue-cured tobacco.
“The trip is part of technical assistance between two countries. They want to learn how to flue-cure tobacco using less wood,” he said.