A lesson from the Ethiopian Commodities Exchange

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Written by Niyi Aderibigbe

Images by Petterik Wiggers

Assefa is a director at Stalwart Management Consultancy Pvt, a company building commodity exchanges across Africa. Stalwart is eyeing Ivory Coast; a country he believes should have been the first to have a commodity exchange in Africa.

“Ivory Coast has everything it needs to set up a successful commodity exchange. It has a very sophisticated financial market. It has a very sophisticated commercial agriculture. It also has a very educated workforce that could easily be trained for the exchange.”

While the ECX keeps flourishing, some commodity exchanges in Africa are not doing so well. Gabre-Madhin often cites the secret of ECX’s success as the holistic approach taken while setting it up. “We not only created the exchange, but the regulatory body, the warehousing operation and the clearing system.”

The exchange’s current CEO, Eshetu, explains why some commodity exchanges in Africa are failing. According to him, a significant shift in behaviour by all market players is needed for commodity exchanges to succeed. Although he concedes that the Ethiopian model may not be right for every country, he argues that “ success would be much closer to home if particular key policies were prudently integrated and enforced by a key stakeholder of the ecosystem, who is, in this case, the state”.

Eshetu advocates government involvement in the early years of a commodity exchange. He recommends that the infrastructure needed for an exchange platform be championed, led and owned by the state, with a public-private partnership (PPP) model, and a longer-term perspective of private ownership once all the key ingredients and essential pillars of success are in place.

Assefa shares the ECX CEO’s sentiments. He says the Ethiopian exchange owes its success to the government’s commitment to making it work by ensuring transparency and a level playing field.

“ECX is a unique market, unlike any other in the world. It is so because the Ethiopian environment required the designing of the exchange in response to the challenges that existed in the country,” says Assefa.

While government involvement is working perfectly in Ethiopia, the commodity markets specialist advises that exchanges should be formed based on prevailing conditions in the host countries. His company built a whole new commodity exchange in Malawi, which is totally private-sector-driven, while in its work in Tanzania, the government and the private sector each have a 50-50 stake. In Kenya, Assefa says the government is facilitating the process, but once the private sector is put together, government will withdraw and take not more than a 10% stake in the exchange.

Africa Exchange Holdings (AFEX), founded in 2012 by Berggruen Holdings, Heirs Holdings and 50 Ventures is also setting up commodity exchanges across Africa. The company has set up the East African Exchange (EAX) in Rwanda and Kenya. AFEX (Nigeria) is now licensed as Nigeria’s first private commodities exchange by the Securities and Exchange Commission.

The success of the innovative ECX has inspired several countries across Africa, with Zambia, Ivory Coast, Mozambique and Cameroon expected to float exchanges next. “The ECX has already built its core competencies as an exchange that can be leveraged not only for its own growth path, but also as a model for many African countries to draw lessons from. Most recently, a large team from the Mozambican Exchange was trained and certified at the ECX Institute here in Addis Ababa. We have clearly established the appropriateness and suitability of the ECX model across Africa,” Eshetu says.

Several agrarian economies in Africa have come to realise the importance of having a commodity exchange. It is only a matter of time before the proliferation of commodity exchanges becomes the continent’s solution to food crises and poverty.

“The 1984 famine, which claimed about 1-million lives, was caused not by lack of rainfall but by market failure”

“ECX is a unique market, unlike any other in the world”



Agriculture in Ethiopia accounts for 46% of GDP,

60% of exports and 80% employment


is traded each day on the ECX

100 000 contracts are processed per hour via electronic platform

$5-billion in commodities traded in 5 years

15-million coffee farmers directly

or indirectly make use of the ECX



US$720 638 681

226 414 tons


$420 767 361

294 336 tons

Haricot beans

$21 019 097

40 455 tons


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