Bridging Traditional Agriculture And Technology
Building A Regional And Global Trading Hub For Commodities
Linking agricultural and commodity producers and buyers to secure competitive prices and guarantee the quality, GCX is on a mission to promote commodity value chains and create new opportunities for economic growth.
As is with organised markets, the Ghana Commodity Exchange (GCX) is a platform or marketplace that brings buyers and sellers together in order to exchange goods in a structured and efficient manner while guaranteeing the market settlements of agreed quality and quantity of commodities, as well as prompt payments. In line with Ghana’s governmental policy and flagship programme ‘Planting for Food and Jobs,’ the GCX is currently focusing upon spurring the industrial development and economic growth of Ghana and West Africa’s agricultural sector. “In the short-term our geographical focus is Ghana and we have started with spot contracts for immediate settlement (payment and delivery),” explains Tucci Goka Ivowi, CEO of the Ghana Commodity Exchange, “the premise being that if you can establish infrastructure and make sure that product delivery is working well in the country, trust is built in the market before you start bringing other contracts or products into the equation. Further down the line, we will be looking to expand geographically.”
Officially launched in November 2018, the GCX’s members include traders, processors, food system providers, aggregators, brokers, and farmers. A key aim of the Exchange is to provide farmers with access to fair and better prices and access to information through market data dissemination directly via phone and access to finance through products like e-warehouse receipt financing. “We took a very deliberate approach to start slowly and build in phases, starting with one building block at a time,” affirms Ivowi. “We started out by listing maize from one warehouse. After that, we listed soybean, sesame and sorghum and are hoping to list rice shortly. It is one commodity at a time, one warehouse at a time. We now have 10 warehouses or delivery centres across the country, mainly in the middle and northern belts of Ghana.”
The GCX links Ghanaian smallholder farmers to agricultural and financial markets in Ghana, as well as across the West African region, and guarantees farmers competitive prices for their crops while meeting food security demands. The warehouses allow farmers to deposit commodities and trade to diverse buyers and are supported by a collateral management system enabling warehouse operators to issue electronic warehouse receipts (e-WRs), which in turn can be used as collateral for loans. “One of the roles we play is bringing modernity through technology and this, in turn, brings an increased interest from our youth. The potential in agribusiness is immense; trading through a system like the GCX which is electronic and very high-tech, is enabling aggregators to establish brokerage businesses and farmers are tapping into the technology. It is quite exciting. It is a simple system that our members are capacitated to use, yet a system that can facilitate one million contracts traded daily and has been built according to international standards.”
The Ghana Commodity Exchange, in addition to its main mandate of providing a regulated electronic marketplace, also undertakes capacity building for smallholder farmers and market actors in general. These farmers and market actors are trained on post-harvest loss reduction management practices, grain handling techniques, grading standards adopted by the Ghana Standards Authority (GSA), the GCX warehouse receipts system and benefits, obtaining loans through the GCX warehouse receipt financing system and trading on the Exchange. The farmers and market actors gain valuable skills in general agronomic practices and trading.
Commodity exchanges are critical drivers of economic development and transformation and GCX is proof of this. Through harnessing the power of the collective action needed to grow agribusiness, enhance the food supply chain and boost the nation’s economic growth, the GCX has opened up an incredible amount of opportunities for Ghana and West Africa’s exports, as well as increasing competitiveness in global markets. Ivowi concludes: “The Ghana Commodity Exchange has brought a new dimension to agriculture, agribusiness and trade in Ghana. It will also be catalytic for trading behaviour and relations, both intra-Africa and across the globe.”
QUOTE: “The Ghana Commodity Exchange has brought a new dimension to agriculture, agribusiness and trade in Ghana. It will also be catalytic for trading behaviour and relations, both intra-Africa and across the globe.” Tucci Goka Ivowi, CEO of Ghana Commodity Exchange