Stock exchanges in the sub region led by the Ghana Commodity Exchange (GXE) have identified a major stumbling block to the African Continental Free Trade Area (AfCFTA).
Meanwhile, the heads of African Commodity Exchanges from Ghana, Nigeria, Tanzania, and Ethiopia identified the lack of standardized commodities as a major hindrance in the quest to capitalize on the vast opportunities presented by the African Continental Free Trade Area.
As trade volumes surge within the Ghana Commodity Exchange (GCX), APEX Commodity Exchange, and the Egypt Commodities Exchange, market leaders grapple with the complexities inherent in achieving uniformity across borders.
Speaking at a webinar organized by the Ghana Commodity Exchange (GCX) on the theme ‘Preparedness of African Commodity Exchanges for AfCFTA,’ Tucci Goka Ivowi, the Chief Executive Officer of GCX, highlighted the enduring challenges of establishing a universal commodity standard in the cross-border market.
Ms. Ivowi emphasized that although commodities are relatively simpler products compared to processed and branded goods, their intricacies pose formidable obstacles.
While Ms. Ivowi expressed confidence in Africa’s ability to overcome these challenges, she cautioned that achieving fully harmonized standards across countries will be a time-consuming process, urging stakeholders to be prepared for the long road ahead.
Mohammed Ali, the Director of Trade in Goods and Competition at the AfCFTA Secretariat, on his part, proposed a strategy for addressing the standardization issue. He suggested identifying a specific group of commodities of interest and finalizing their standards.
This approach, Ali argued, would require leveraging the convening power of AfCFTA and tapping into the expertise of African exchanges and organizations responsible for setting standards, such as the African Standard Organizations and African Union. Once established, these standards would be conveyed to heads of states and governments to initiate the harmonization process within their respective countries.
The Importance of Information-Sharing and Open Discussion
Ali also stressed the importance of information-sharing and open discussion in leveraging the potential of AfCFTA. He lamented the prevailing lack of information about the operations of commodity exchanges on the continent, attributing the relatively low intra-African trade to this knowledge gap.
The Director of Trade in Goods and Competition urged commodity exchanges to foster transparency and willingly share information, advocating for a common voice among industry players. With access to comprehensive market information, AfCFTA can identify suitable policies to address existing challenges and avoid duplication of efforts.
The role of technology in preparing the African Exchange Market was also underscored by the CEO of the Ethiopia Commodity Exchange. Emphasizing the transformative power of technology, particularly in digital payment infrastructure, he asserted that it can effectively integrate crucial institutions such as warehouse operators, quality operators, banks, and clearing and settlement systems. Such integration would facilitate seamless operations and enhance the development of new products and services.
While the standardization challenge within AfCFTA remains an obstinate hurdle, experts maintain a sense of cautious optimism. Through concerted efforts, transparency, and information-sharing among commodity exchanges, progress can be achieved in addressing the complexities of commodities and unlocking the full potential of increased intra-African trade.
In the broader view, the achievement of standardization will help the Ghana Commodity Exchange to get access to different commodities on the continent to enhance the operation of the exchange.
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