East Africa’s first commodities exchange, linking farmers and producers of other goods to agricultural and financial markets, was launched in Kigali last week, creating fresh opportunities for regional trade.

The East Africa Exchange (EAX), which is privately funded, will help producers to secure competitive prices for their goods, as well as facilitate access to funding opportunities.

It is wholly owned by Africa Exchange Holdings Ltd (Afex), whose shareholders include Tony O. Elumelu of Heirs Holdings, Nicolas Berggruen of Berggruen Holdings, Dr Jendayi Frazer of 50 Ventures and Rwandan investment company Ngali Holdings.

It launched operations in January last year and has mainly traded in maize and beans. The plan is to increase traded items to include coffee, tea, cereals, as well as minerals.

In November last year, the exchange conducted its first regional trade auction, selling 50 metric tonnes of maize from Kampala-based Savannah Commodities Ltd ex-warehouse at $398 each to Ladislas Mwitende from Top Services Enterprises Ltd of Rwanda, which operates in the Musanze area in Northern Province.

READ: Rwanda moves to cut post-harvest losses

Dr Frazer, who is a former US assistant secretary of state for African Affairs, said the EAX platform would facilitate cross-border trading of commodities within the region by providing a central marketplace and connecting buyers and sellers throughout the region.

“To be a true regional exchange, we are also opening up for regional investors so we can become East-African owned.”

Plans are also underway to set up centres in Uganda and Kenya to extend the market’s operations, and to also test the South Sudan and Tanzanian markets, she added.

Mr Elumelu emphasised the need for Africa to move towards greater self-sufficiency with private investment and strategic partnerships:
“The EAX showcases our desire to identify far reaching investment opportunities, while ensuring that most of the value-adding aspects of Africa’s resource wealth stays on our continent,” he said.

Mr Berggruen said the Exchange was “complementing the East African Community’s goal of regional economic integration, and putting in place a world-class exchange to create a globally competitive market for Africa’s commodities”.

Products for sale on the Exchange are graded for quality, with Rwanda Bureau of Standards being the key standards enforcer.

Analysts say the commodity exchange will not only help regional farmers to eliminate post-harvest losses, but also improve the liquidity levels in the economy. It will also encourage a steady supply of quality raw material needed to trigger industrialisation.

READ: Huge appetite has EAX wooing region

“The commodity exchange is suitable for agriculture transformation.

There is no country that has developed without transforming agriculture. With farmers paid more for their produce, they are encouraged to grow more,” said Alex Ruzibukira, the director general in charge of industry and SMEs at Rwanda’s Ministry of Trade and Industry.

As part of ensuring quality and reducing post-harvest losses, the EAX runs several warehouses in Rwanda and has contracted Collateral Management International to support farmers.

During the 6th Northern Corridor Integration Meeting that took place in Kigali, Rwanda was asked to make a business proposal for joint investment in EAX for consideration. The partner states have also agreed to exchange legal texts on commodities and warehouse receipt systems and standards by July 15.