The National Treasury building in Nairobi. FILE PHOTO | NMG
The National Treasury has set the annual licensing fee to operate a commodities exchange at Sh2.5 million.
Kenya
is trying to set up a commodity exchange like the stock market, where
farmers can sell maize, wheat, bananas, sugar, barley, milk, cotton,
beef, fruits, milk products and beans through an online auction.
This will allow farmers to hedge against seasonal price fluctuations and eliminate cartels manipulating prices.
Currently,
brokers who control market access and storage determine prices and have
been driving farm-gate price lower, exploiting farmers while reaping
huge profits.
The commodities exchange wants to kick
out faceless intermediaries by forcing them to operate under strict
transparent rules on approval by the company operating the exchange
market.
The commodity exchanges will be licensed by the Capital Markets
Authority (CMA), which will charge brokers in the market Sh50,000
annually to participate in the exchange.
“The
authority, shall, within 30 days from the date of receipt of an
application that meets all the requirements, grant a licence to an
applicant, if the authority is satisfied that the applicant is eligible
to be licensed as a commodity broker,” Treasury Secretary Ukur Yatani
said in the draft commodities exchange regulations. The market will also
be used to trade minerals as alternative to agricultural commodities.
This comes even as changes at the ministry of trade and industry have
left plans to roll out State-backed Warehouse Receipts System (WRS)
early this year in doubt.
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