Nigeria’s AFEX, the first private agricultural commodities exchange player in the country, has unveiled plans to raise US$65 million to fund its expansion into seven additional African countries. This strategic move aims to capitalize on the growth in intra-African trade, driven by the entry into force of the Zone Continental Free Trade Association (Zlecaf).
Established in 2014, AFEX already operates in Nigeria, Kenya, and Uganda, facilitating the trade of nine agricultural commodities such as maize, wheat, sorghum, and cocoa. Since its debut on the inaugural list last year, AFEX has experienced remarkable growth, doubling its revenue and expanding its operations into East Africa. It has successfully provided financing to over 450,000 farmers and traded an impressive 526,850 metric tonnes of commodities in Nigeria, Kenya, and Uganda.
The company’s ambitious plan entails expanding into a total of nine African countries over the next decade, thereby creating regional markets that foster a balance between demand and supply through intra-African trade. The countries being considered for expansion include Benin, Togo, Ghana, Côte d’Ivoire, Tanzania, Ethiopia, and Zambia.
Ayodeji Balogun, the CEO of AFEX Commodities Exchange, revealed the rollout plan, stating, “AFEX Commodities Exchange will expand its operations to Ivory Coast this year and Ghana in 2024, before moving to Benin, Togo, Tanzania, Ethiopia, and Zambia.” Balogun also shared details about other development projects, including increasing the storage capacity of AFEX’s warehouses to 1 million tonnes by 2025, obtaining more commodity trading licenses, and introducing gold and derivatives to its trading portfolio.
Balogun believes that dismantling the barriers hindering intra-African trade under the African Continental Free Trade Agreement (AfCFTA) will unlock significant value for spot contracts, exchange-traded contracts, fixed-income products, and derivative products offered by AFEX. He emphasized the potential of AFEX’s expansion in consolidating intra-African trade, leading to increased productivity at the national level and enhancing food security across the continent.
By strategically expanding its presence, AFEX aims to address the current low level of regional trade, which stands at 14.4% compared to 59% in Asia, 69% in Europe, and 30.4% in North America. The commodity exchange giant envisions that facilitating cross-border trade in Africa will not only boost regional trade volume but also strengthen its capacity to meet the growing demands of Africa’s population.
AFEX’s expansion plan aligns with the broader goals of promoting intra-African trade and economic integration, as envisioned by the AfCFTA. It presents a significant opportunity to drive agricultural development, enhance food security, and foster economic growth across the continent, while also positioning AFEX as a key player in the African commodities market.
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