Kenya is redrawing its plans for a commodities exchange for
agricultural and non-agricultural produce, which
is likely to further delay the establishment of a regional commodities exchange linking Kenya, Uganda and Rwanda.
is likely to further delay the establishment of a regional commodities exchange linking Kenya, Uganda and Rwanda.
Principal Secretary in the State Department of Trade Chris Kiptoo told The EastAfrican that
the government has now decided to establish an exchange that deals with
both agricultural and non-agricultural produce such as oil and
minerals, a project that will take time as a new legal and institutional
framework has to be put in place.
Dr Kiptoo said a new multicommodity Warehouse Receipt Bill has been prepared and is under consideration by the Attorney General.
Once established, the exchange will be regulated by the Capital Markets Authority.
Initially,
Kenya had planned to create an exchange to start trading in
agricultural products and only introduce non-agricultural items once the
market became fully operational.
The commodities
exchange was to start trading maize, wheat, sorghum, millet, and coffee
in the initial phase followed by tea, cow peas, dry beans, ground nuts
and pigeon peas in the second phase.
The initial Warehouse Receipt Bill, which only catered for the
trading of agricultural produce has been in parliament since 2015,
raising concerns from the partner states about the country’s commitment
to the joint infrastructure project.
The 11th summit of
the Northern Corridor Integration Projects held in Nairobi in October
2015 blamed Kenya’s slow progress on establishing its legal and
regulatory framework for hampering implementation of this market.
Kenya,
Uganda and Rwanda agreed to a joint commodities exchange and warehouse
receipting system to ensure transparency in standards and pricing of
farm produce.
Negotiating power
But
Kenya has lagged behind its regional peers by falling behind in
enacting legislation to facilitate the establishment of a mart to
stabilise the prices of agricultural produce.
Burundi
and Tanzania are not members of the Northern Corridor transport strip
linking landlocked Rwanda, Uganda, South Sudan and Kenya.
The
establishment of national commodities exchanges by the EAC member
states is the first step towards creating a joint regional commodities
exchange that will link Kenya, Uganda and Rwanda as part of the Northern
Corridor infrastructure projects initiative.
Rwanda already has a commodities exchange which is private sector-driven.
Kenyan plans to convert various publicly and privately owned entities into warehouses for the proposed market.
These
include the Kenya National Trading Corporation, the National Cereals
and Produce Board, the Kenya Farmers Association and the Kenya Planters
Cooperative Union.
The warehouse receipting system is
expected to help farmers to obtain credit from financial institutions
using their agricultural harvest as collateral.
The
joint commodities exchange will ensure food security and stabilise
prices of non-perishable agricultural crops within the EAC.
Standards
of quality and quantity will be harmonised across the region while the
prices of the crops will be determined by the forces of supply and
demand.
It will also foster regional integration and
strengthen the bloc’s negotiating power with the rest of the world in
the pricing of key exports.
Each country is expected to
create its own private-sector-driven commodities exchange that will be
linked electronically to facilitate interaction between buyers and
sellers from all the partner states.
No comments :
Post a Comment