Lagos - Several companies have signed a Memorandum of Understanding with Nigeria’s Federal Ministry of Agriculture to create a pioneering warehouse receipt system that will enable Nigerian farmers and co-operatives to safely store their produce at accredited warehouses.
Following the MOU signed with African Exchange Holdings, Berggruen Holdings and 50 Ventures, Nigerian farmers may now use receipts for their produce as collateral for loans.
This will control price volatility due to the availability of buffer stock, enabling farmers to sell produce at better price points.
The two-year pilot phase of the warehouse receipt system covers seven states, mostly in northern Nigeria, where agriculture is by far the largest economic sector, namely, Gombe Kano, Kaduna, Katsina, Kwara, Oyo and Zamfara.
The exercise will commence in October.
The Federal Ministry of Agriculture will support the warehouse receipt system by creating the enabling environment that is essential for its successful delivery, and will also provide warehouse infrastructure.
Dr Akinwumi Adesina, Nigeria’s minister of agriculture, said strengthening agricultural markets was critical to diversifying Nigeria's economy.
The partnership with AFEX will help improve the access of farmers to markets, reduce post-harvest losses, stabilize prices and raise their incomes, he said.
"We are rapidly modernizing agriculture in Nigeria and the development of warehouse receipt systems will underpin the successful establishment of thriving agricultural commodities exchanges in Nigeria,” Adesina said.
Tony Elumelu, AFEX Holdings Chairman, said his company was pleased to be working with the Nigerian government on this project to deliver transformative, sustainable investment to the country’s agribusiness sector.
"This initiative is a step towards financially empowering more farmers and ensuring that agriculture is not only commercially viable, but a strong positive contributor to the Nigerian economy," Elumelu said.
This builds on the experience and success of its subsidiary – East Africa Exchange – in Rwanda which has become a critical player in agribusiness development across the continent.
Nicolas Berggruen, the founder and president of Berggruen Holdings, said agriculture was key to the prosperity of the continent.
"Specifically for Nigeria, we are investing in the infrastructure needed to ensure the flow of commodities from farms to the local, regional, and global marketplace,” said Beggruen.
Jendayi Frazer, the former US assistant secretary of state for Africa, who is the managing partner at AFEX, concurred.
“The warehouse receipt system will help improve food security across Nigeria. It will not only give farmers and co-operatives better access to markets by linking their market produce to high-value buyers, but will also deliver higher profits for stakeholders," she said.
- CAJ News