The Lagos Commodities and Futures Exchange (LCFE), has called for a legal framework that will enable commodities to be registered in Nigeria before export.
The Chief Executive Officer, LCFE, Akin Akeredolu-Ale, said this at the review of commodities ecosystem and prognosis for 2022, on Friday, in Lagos.
He said the framework would boost transparency and price discovery in the commodities ecosystem.
He also stressed the need for government to initiate policies that would promote commodities exchange in Nigeria and activate the ecosystem, and the need for Nigerians to leverage the potential of the ecosystem.
“Nigeria must have a full structure in place for commodities exchanges to operate optimally. It is like a green field in Nigeria. A lot of participants are used to trading equity and fixed income securities,” he said.
He added that LCFE’s outlook for 2022 was more on advocacy to encourage trading, particularly the teaming youth population.
“We have commenced proof of concept trade as preparation to full trade. Commodities contribute about 70% to Nigeria’s Gross Domestic Product (GDP). The industry generates 80 per cent employment.
“The focus of foreign countries on Nigeria and Africa is commodities and most of the time not infrastructure,” said Akeredolu-Ale.
According to him, if the commodities exchange is prioritised in Nigeria, it will accelerate the growth of the manufacturing sector and enhance food security.
He said: “How much of our sovereign investments go into the commodities space. There should be a paradigm shift between public sector financing and enabling private sector in the commodities exchange.”
He added that the Federal Government policies are very important in driving the commodities exchange and the diversification agenda.
Akeredolu-Ale said the company had invested heavily in technology to drive commodities ecosystem in Nigeria.
“In 2022, we shall partner with the media to embark on aggressive financial literacy that involves schools, religious groups and other platforms.
“We shall engage SEC, federal, state and local government agencies.
“Our other areas of focus for development are non-interest backed commodity instruments and other sources of finance instruments.”
He explained that LCFE was already working on guidelines and frameworks for commodities notes, listing of Exchange Traded Funds (ETF), and logistics investments, stakeholders’ engagement and strategic partnerships.
Nigeria must have a full structure in place for commodities exchanges to operate optimally. It is like a green field in Nigeria. A lot of participants are used to trading equity and fixed income securities.
On how to create more awareness, Akeredolu-Ale said the exchange had concluded arrangement to roll out youths’ enlightenment programme that would help expose the millennials to the rudiments of the commodities exchange in 2022.
He said the exchange was targeting up to 10 million youths for the initiative, and would also build capacity of trade dealing members to make it easy for people to operate whenever they wanted to engage in trading.
He added that the LCFE would partner the Chartered Institute of Stockbrokers (CIS) to onboard 2,500 stockbrokers in 2022, to drive millennials into the commodities exchange ecosystem.
He said the exchange would invest heavily on cold chain and logistics, noting that without cold chain, the commodities exchange ecosystem could not be derisked.
Earlier in his address, the Head of Operations, Dr Allwell Umunnaehila, highlighted some of the milestones of the LCFE within its short period of existence.
Umunnaehila listed some of the achievements as bringing on board some dealing member firms, settlement banks, signing of Service Level Agreement (SLA) with the Nigeria Inter-Bank Settlement System (NIBSS), and collateral managers, among others.
