The commodities exchange — the Zimbabwe Mercantile Exchange (ZMX) has finalised on-boarding of participants on the platform as it fast approaches its launch scheduled for end of this month.
This also comes in time for the beginning of the 2020/21 agriculture marketing season. A pilot programme started beginning of October 2020 and is expected to run up to March 31, 2021 which is also the scheduled launch date.
An update on progress made so far towards operationalising the exchange shows that custodian and settlement banks, farmers, warehouse receipt financiers, commodity off takers and end users, regulators, quality inspectors and warehouses among others have been on-boarded.
The success of the commodities exchange will ride on the operationalising of the Warehouse Receipt System (WRS). This will help address one of the challenges farmers face- that is poor storage facilities resulting in post-harvest losses.
In line with this, warehouses will be used to facilitate the grading, certification and physical safekeeping of the commodities in their warehouses.
Custodian banks will be responsible for custodianship of the platform’s settlement accounts and client’s physical warehouse receipts while settlement banks will manage settlement accounts as well as accept and action settlement instructions from the exchange. Identified warehouse receipt financiers will be offering credit to warehouse receipt holders thus farmers will have access to post harvest funding, which is currently lacking and affecting production.
At a recent briefing with stakeholders, Escrow Group chief executive officer Collen Tapfumaneyi, indicated the ZMX had managed to get regulatory approvals and implementation would address the major challenges farmers, especially small-scale farmers faced.
“Farmers have been facing logistical challenges, communal farmers’ produce becomes unattractive, due to the cost associated with transporting the disaggregated commodities from the farmer to the buyers.
“Another challenge is post-harvest losses due to limited storage options for agricultural produce hence forcing them to sell, sometimes prematurely,” said Mr Tapfumaneyi.
But the implementation of ZMX will among other things provide farmers with easier access to markets and correct pricing information as well as provide a fair price discovery mechanism and predictable pricing.
The ZMX initiative is a partnership between Government and the private sector led by Financial and Securities Exchange Limited (FINSEC), TSL Limited and CBZ Holdings. Further assistance was in research and policy formulation was drawn from the Food and Agricultural Organisation (FAO) and Indaba Agricultural Policy Research Institute (IAPRI) who rendered technical assistance centred around how small holder farmers can participate in the mainstream economy.
FINSEC, a subsidiary of Escrow Group is undertaking the technical implementation work in setting up the exchange.
TSL together with the Grain Marketing Board, Origen and ETG will be responsible for warehouses infrastructure and logistics. Timely implementation of the exchange means farmers from across the country will start benefiting from it this agriculture marketing season as they start selling crops harvested this year.