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BUILDING VALUE IN AFRICA’SCOMMODITY CHAINEleni Gabre-MadhinJune 20, 2013

2AGRICULTURE IS BUSINESSAGRICULTURE IN AFRICA PRESENTS AMASSIVE GROWTH OPPORTUNITYSTRUCTURED TRADE SOLUTIONSCAPTURE VALUE AND CATALYZEFURTHER GROWTH

3Africa’s Promise• Positive economic growth outlook across continent,billion strong population, and improving investmentclimate• Agricultural yield currently at 25% of on-farmpotential – room to grow volume on existing land use• Renewed focus on achieving Green Revolution- public sector investments in productive technology• The last agricultural frontier in the world: 67% ofarable land yet to come under cultivation, a majorthrust toward commercial farming

4Africa is ReadyMali (rice, cowpeas)Senegal (rice, g.nut)Cote d’Ivoire (cocoa)Ghana (cocoa, maize)Nigeria (palm oil, cassava)Cameroun (cocoa)West Africa Regional Hubs:- UMOA- ECOWASE and S Africa Regional Hubs-- EAC- COMESAEgypt (cotton)Sudan (sesame, sorghum,gum arabic)Ethiopia (coffee,sesame, maize)Uganda (coffee, maize)Kenya (coffee, maize,wheat)Rwanda (coffee)Tanzania (coffee, maize,cashewnut)Malawi (maize)Mozambique(maize, cashewnut)Zambia (maize)Zimbabwe (maize)

A Better Way for Africa’s Farmers5

6What is a Commodity Exchange?• A reliable, efficient, and transparent means toconnect many buyers and many sellers ofstorable, standardizable, and divisible assetsCore Functions:Matching of tradesPayment transferPhysical deliveryMarket information

7Why does Africa Need CommodityExchanges?• African commodity markets are inefficient:uncoordinated, high contract risk, high pricerisk, costly to use, relationship-based, thin andsegmented, disadvantageous to the poorLow productivity growthWeak domestic food securityLow commodity-linked industrial growth(processing, post-harvest)Weak export performance

8An Exchange is TransformationalDirect Impact• Farmer livelihoods• Production &productivity• Quality• Food Security• Export Performance• Agro-IndustrialProcessing• Tax AdministrationCatalytic Impact• Storage• Logistics• Quality management• Transport• Packaging• Training services• Market intelligence• Data services• Higher education• Business reporting

The ECX Model9

Our dream• To build a world class institutionsignaling Ethiopia’s entry into amodern global market• To achieve the “New Ethiopia”,embodying passion, innovation,professionalism, and excellence

11The Idea• An Ethiopian Exchange for EthiopiaGlobal learning but tailored to country▫ Spot then futures▫ Small actor oriented▫ Open outcry then online trading▫ Holistic and integrated operational scope

12Unique Vision• An “Ethiopian Exchange for Ethiopia”Global learning but tailored to country▫Small actor orientedSpot then futures tradingOpen outcry then online tradingHolistic and integrated operational scope

ECX….Where we are today13

Growth with Excellence• Members: 350 Members, 11,200 clients, 12% farmercooperative unions- 2.4 million small farmersreached• Trading: 2011-12: 608,000 tons of commodities(coffee, sesame seed, pea beans, maize);US$ 1.4 billion trade value; 109,500 transactions• Warehousing: 17 delivery sites; 5.7 million bags/yeargraded, handled, stored, and delivered, 300,000 tonsleased storage capacity

15• Clearing: 10 partner banks; settled by 11 am nextday• Market data: Real and discrete time, push and pulltechnology:▫ Prices transmitted in 2 seconds to 82 rural ticker boards▫ Website - 2000 hits/day, 2 nd most visited after SAFEX);▫ IVR (call-in price update): 1.1 million calls/ month; 61,000call-ins/day▫ SMS (mobile push out): 256,000 subscribers• Warehouse Receipt Financing

16Powerful Results• Zero Payment or Delivery Default• Zero Trading Order Error• Zero System Down

17Signs of Transformation• Improved quality better quality coming to themarket; tripling of volume of top 3 grades of coffee in 18months• Market transparency empowerment of smallactors, convergence of local and national price, farmershare of final price up from 38% to 65%• Market inclusion small actors access to nationalmarket• Informal to formal consolidation of small tradingbusinesses

Awards and Recognitions18

19Most importantly….Giving Hope inWhat Ethiopia Can Achieve

20The leading turnkey Exchange Builderfor frontier markets.www.eleniexchanges.comeleni@eleniexchanges.com