Vice President Yemi Osinbajo, on Thursday, stressed the need for the development of a vibrant commodities trading ecosystem in the country, as part of diversifying the economy away from dependence on crude oil to boost government revenue and foreign exchange earnings.
Speaking at a Roundtable on the Nigerian Commodities Trading Ecosystem hosted by the Securities and Exchange Commission (SEC) in Lagos, Thursday, Osinbajo said such an ecosystem is of paramount interest based on the abundance of natural resources in Nigeria.
Added to this, according to the Vice President, who was represented by Dr. Yemi Dipeolu, Special Adviser to the President on Economic Matters, said the commodities trading ecosystem and a comparative advantage in agriculture, solid minerals, and oil and gas.
This is why, he continued, the government’s emphasis, in the immediate term, is the agricultural sector.
Osinbajo said the Federal Government attaches great importance to an active and vibrant capital market which will contribute to national growth and development.
To achieve this objective, he stressed that the capital market has to operate at an optimum level, which is why the implementation of the 10 year Capital Market Master Plan remains a key priority.
Agriculture, he pointed out, “accordingly occupies a pride of place in Federal Government policy, as stated on numerous occasions by the President and as articulated in the Economic Recovery and Growth Plan (ERGP). The importance of agriculture was underscored during the last recession as its growth then of about three to four percent prevented a steeper decline. Agriculture is also important for food security and as a means of generating a quick production response.
“The agricultural sector is also important for job creation and employment and for producing the raw materials that go into agro-processing. Indeed, the subsisting Agriculture Promotion Policy specifically aims to ‘integrate agricultural commodity value chains into the broader supply chain of Nigerian and global industry.”
Osinbajo added that a vibrant commodities trading ecosystem is therefore essential to underpin an agricultural transformation in Nigeria as organising production in the agricultural sector would ensure that every part of the value chain contributes to its growth.
Welcoming participants to the event, Acting Director-General of the SEC, Ms. Mary Uduk said the commission is collaborating with all relevant stakeholders to implement the 10-year Capital Market Master Plan with the aim of making Nigeria’s capital market one of the world’s deepest and most liquid as well as the largest in Africa by 2025
One of the crucial initiatives of the plan she said, is to develop a thriving commodities trading ecosystem. Nigeria is well endowed in agricultural, metals and energy commodities.
“Currently, our potential as a nation is grossly underutilised in the area of commodities. There is, therefore, the need for these commodities to be efficiently harnessed to the benefits of our consumers, industries, and governments.
“We believe that if we can develop and institutionalise a vibrant commodities trading ecosystem in Nigeria, we can substantially address problems such as lack of storage, poor pricing, non-standardization as well as low foreign exchange contribution affecting our agriculture and other commodities sub-sectors”.
To achieve this, Uduk said the roles of commodity exchanges are very critical as they bring price transparency and value addition to farmers; they ensure quality products for buyers, provide investment opportunities across the value chain, provide additional class of asset for investors and help diversify the nation’s economy in line with the current administration’s agenda.
Uduk said the nation still has the challenging task of transitioning from a grossly informal commodity trading system to one consummated on the platforms of commodity exchanges. Currently, the transactions through commodity exchanges are insignificant compared to what takes place in the informal markets, even among industrial commodities users.
“In laying down the foundations of our formal commodities market therefore, we have to ensure that the spot commodity market is efficient as we move into the futures market.
“No doubt, this will entail a robust education and enlightenment process, continuous engagement and cooperation among key stakeholders, favourable government policies and strengthening of legal and regulatory frameworks,” she added.
Photo caption: Ms. Mary Uduk (right), acting Director-General of the SEC welcoming guests to the roundtable on Nigerian Commodities Trading Ecosystem in Lagos on Thursday.