AFEX, others to unlock N2.5tr funding for farmers

 Nduka Chiejina (Asst. Editor), Abuja

THE Financial Market Dealers Quotation (FMDQ) AFEX Commodities Exchange Limited and  Dubai Gold Commodity Exchange (DGCX) are working to unlock about N2.5 trillion funding for about one million small holder farmers in the next five years.

The three organisations signed a Memorandum of Understanding (MoU)  to this effect on yesterday in Abuja.

The Chief Executive Officer,  AFEX, Mr Ayodeji Balogun, said it is his vision to reach a million small holder farmers in the next five years and boost agric sector funding by five folds

“Currently, agricultural lending from commercial banks is N500 billion. If we want to achieve growth in the sector, we need financing of N2.5trillion. Our desire is to create new asset classes so that liquidity are increased and risk will be better managed,” he said.

He expressed worry that the value of N500billion from the banks to the agricultural sector is inadequate to stimulate the type of growth the Federal Government wants for the agricultural sector.

He said the agreement signed recognises the importance of product innovation to market development and would encourage participation of a wider number of investors in the capital market.

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Products developed under the new partnership, he said, “would support innovative financing structures for the sector that will leverage AFEX’s established infrastructure and supply chain network.”

He said the agreement would pave the way to AFEX’s path to building Africa’s second commodities derivative market.

“AFEX is working with 106,000 farmers in Nigeria, about 45,000 of them have sold their products through our trading platforms in the last five months,” he said.

The farmers he said are scattered across 15 states and deal on five commodities.

In his comments shortly after signing the deal, the FMDQ boss Bola Adele Koko said his company would support the growth of the agricultural sector through commercial and market-driven initiatives.

Through this partnership, he said FMDQ would be introducing new products aimed at de-risking the value chain as well as attracting capital market funding to the sector.

He also said the agreement would help to diversify the products available to investors in the agricultural sector.