The Financial Market Dealers Exchange and the AFEX Commodities Exchange Ltd have partnered to unlock about N2.5trn financing to over one million farmers in five years. This was a part of opportunities derivable from the Memorandum of Understanding (MoU) both parties signed Wednesday in Abuja.
The Chief Executive Officer, AFEX, Mr. Ayodeji Balogun and the Chief Executive Officer, FMDQ, Mr Bola Onadele, both signed on behalf of their companies. Commenting during the MoU signing ceremony, Ayodeji said that currently, the value of credit from banks to the agricultural sector is about N500bn which is inadequate to stimulate the kind of growth needed in the sector. He said if the economy must grow at a sustainable rate of about 4.5 per cent, then there is need to unlock additional source of finance for the agricultural value chain in Nigeria.
Balogun said that products developed under the new partnership would support innovative financing structures for the sector that will leverage AFEX’s established infrastructure and supply chain network. According to him, AFEX is currently, supporting 106,000 farmers engaged in five commodities, noting that about 45,000 of them have sold their products through its trading platforms in the last five months The farmers he said are scattered across 15 states and deal on five commodities.
He said, “We are extremely proud to be collaborating with FMDQ as this helps our goal of increasing our products offerings to investors. “We see a clear path to product innovation that will unlock a wider range of products that are able to be traded within Nigeria’s capital markets, promoting broad-based wealth creation that is accessible to every Nigerian. “Our vision is to reach a million small holder farmers in the next five years and we anticipate that we would boost agric sector funding by five folds “Currently agricultural lending from commercial banks is N500bn. If we want to achieve growth in the sector, we need financing of N2.5tn.
Our desire is to create new asset classes so that liquidity increases and risk will be better managed. In his comments, the FMDQ CEO said his company would support the growth of the agricultural sector through commercial and market-driven initiatives. He also said the move would help to diversify the existing products available to investors in the agricultural sector. 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.
