AHCX - A Transformational Commodities Market

 

AHL Commodities Exchange Limited, a subsidiary of Auction Holdings Limited has only been in operation for less than a year. However, the success stories registered so far, confirms the transformational path the company has embarked on in so far as commodities trading is concerned. The company has so far managed to attract the attention of the international commodities importers from across the globe, registering in excess of US1.9bn of trade inquiries in 2013. However, the journey hasn’t been all rosy for the exchange, with the main challenge being the supply constraints in its first year of operations.

“The first year of operations has been exciting as well as challenging, with lots of learning in it. At the end of the day, the experiences from 2013 can only help AHCX position Malawi better on the commodities space, as well as implement strategies that are meaningful to all its stakeholders both domestically and internationally” said Davis Manyenje, Head of Operations for AHCX.

Manyenje further attributed the growing confidence in the Exchange to implementation of an elaborate end to end market solution for both buyers and sellers, emphasis on quality assurance, transparency, efficiency in price discovery as well as the commitment to the establishing vision of its promoter, AHL Group.

Manyenje further disclosed that AHCX is partnering with a number of commodities Exchanges to share   competencies as well market information with an aim of exposing Malawi’s potential to the world at large.

“It’s always been disheartening to see our local farmers losing value and failing to benefits from their sweat due to inefficient  unstructured marketing system that we have used since time in memorial. We are now transforming the commodities trading landscape, bringing in transparency and efficiency, as well as ensuring that issues of quality are comprehensively addressed so as to make Malawi’s commodities attractive on the international market. We are now seeing several financial institutions coming in to support farmers and traders with warehouse receipt financing on commodities other than tobacco, effectively spreading the benefits that tobacco farmers have long been benefiting to  farmers of other crops. The same applies for other  service providers that are now coming to offer production inputs, confident that the farmers now have a sustainable and assured market structure, where recoveries of lending is almost assured”.

One unique development noted in 2013 was the impact of the price information that AHCX was disseminating through the Electronic Price Display units as well as the local media. Prices on the local markets stated to react to AHCX prices, with farmers benefiting alot more from such a development.

Manyenje however concedes that there is still alot that has to be done to ensure that farmers across the country know about the availability of this exciting market structure and its striking benefits. AHCX is therefore working with several stakeholders at the grassroots level  promoting awareness of the market among farmers as well as promoting setting up of cooperatives and farmer clusters for  efficiencies.

“Our focus for 2014 is to cement the growing confidence of our local farmers and traders with an aim of increasing their participation. We intend to harness our experience, technical competencies as well as the growing confidence on the demand side, to provide a robust market of choice for farmers and traders on the supply side as well as domestic processors and exporters while meeting the demand of the foreign importers. AHCX intends to expand the scope of its interface with stakeholders including financial institutions, commodities grading companies, logistics companies, fumigation service providers and other service provider to ensure a seamless trade facilitation. The commodities space has potential to create jobs and new supporting business opportunities if well structured as there are several support services. “We will give reason to the farmers expand their production, reason to financiers to support producers of other commodities not only tobacco, reason to service providers to support other commodities traders as well as enhance the profile of agriculture in general for Malawi by providing a robust, technologically advanced and competitive market environment at AHCX and that’s our promise. This market platform will continue to innovate and respond to the needs of its stakeholders, backed by well researched to ensure relevance and sustainability.

In 2014, AHCX will ensure that complaints about lack of market for farmers are history. The demand being registered so far before the onset of the harvest season gives assurance to AHCX that there is a market for all the output from the farmers in Malawi both domestically and internationally. Any farmer looking to benefit from their sweat needs to understand the importance of efficient price discovery and their involvement in setting prices of their commodities and the platform for that is AHCX. It’s no longer attainable that farmers should continue to be on the receiving end and always be price takers, when every other seller of items sets the price of their commodities. Uniquely, AHCX ensures that both the seller and the buyer walk away happy having negotiated an amicable price for the commodities.

With appropriate policy support, Manyenje says, commodities other than tobacco have the potential to rake in over US1billion per annum in export revenues, which with earnings from tobacco could significantly impact on the country’s foreign exchange potential and drastically impacting on the macroeconomic fundamentals. “That’s the most significant transformational impact of AHCX as a structured market for Malawi, yet to be exploited” Concludes Manyenje