Law on commodity exchange in pipeline

 

President Jakaya Kikwete with the Aga Khan at State House in Dar es Salaam on February 23, 2015. PHOTO | EMMNAUEL HERMAN | NATION MEDIA GROUP 

Written by ABDUEL ELINAZA

THE legal framework for establishment of a commodity exchange market awaits cabinet approval before landing in parliament in the near future.

The stakeholders, via the Capital Market and Securities Authority (CMSA) have completed drafting a bill seeking amending of the CMSA Act and presented it to the Ministry of Finance and Economic Affairs.

CMSA Principal Public Relations Officer, Mr Charles Shirima, said the treasury will send the proposed bill to the cabinet before sending it to parliament.

“The proposed new law will repeal the existing CMSA Act and replace it with the new statute to be known as Capital Markets and Commodities Exchange Act,” Mr Shirima told Daily News.

On completion of the legislation procedures, Tanzania would be hosting the first East African exchange market. President Jakaya Kikwete, the pioneer of the commodity market, said after visiting Ethiopian Commodity Exchange (ECX) in 2013 that the exchange would provide a marketplace where buyers and sellers meet to trade and be assured of quality, delivery and payment.

However, the road has been bumpy for lack of the law and regulations to support establishment and operations of commodity exchange.

Tanzania Commodity Exchange (TCX) was recently registered as a company and was now in the process of identifying a trading house. The Tanzania Commodity Exchange Market Company Ltd was incorporated some four months ago while trading office will be housed at LAPF building in Kijitonyama along New Bagamoyo Road.

CMSA has also secured funds from the World Bank to train dealers/brokers and the process will start soon. After the training the dealers/ brokers will undergo some testing prior to licensing them.

According to CMSA, the commodity exchange will initially trade in four crops - cashew nut, coffee, cotton and rice. Currently, the four crops are being traded under the warehouse receipt system.

The exchange is designed, among other things, to include a trading floor, warehouse delivery locations and price tickers. Experts in agro-business have it that the exchange is designed to liberate farmers by exposing them to reliable market environments locally and abroad.