Ermias EshetuCEO of the Ethiopia Commodity Exchange (ECX)

Africa’s first commodity exchange has revolutionized Ethiopia’s economy and its mainstay – agriculture – and is providing inspiration for change in other countries. Ermias Eshetu, CEO of the Ethiopia Commodity Exchange (ECX), explains the extent of the impact it has had on farmers, commodity traders and the quality of Ethiopian produce, its plans to further expand access with more trading centers, and how technology can physically place its services into the hands of rural farmers.

The Worldfolio: What would you say are the milestones the ECX has achieved in its seven years of existence, how did it impact the backbone of Ethiopia’s economy – agriculture – in terms of efficiency, security and even integrity, and how is it inspiring Africa?

Ermias Eshetu: In order to get to the backbone of Ethiopia’s economy, it is very important to understand the structure of the value chain within the economy. The value chain at the bottom is very broad. It is represented not only in terms of foreign currency or in terms of coffee or sesame, but in terms of daily subsistence. 80% of our people are dependent on agriculture. Our population is nearing 100 million – that is nearly 80 million people. In terms of understanding the backbone of the economy, we have 80 million people depending on agriculture and they are unfortunately very fragmented. It is important to understand the way farming is done in Ethiopia, especially because farmlands have been split into smaller portions from generation to generation.

The current generation owns the smallest lot of farming space. Yet, these farmers have families to take care of. The farming plots are getting smaller and that means that the farmers are further away from the primary market. It is very important to take into consideration that Ethiopia’s infrastructure developments, such as railways and roads, are fairly new. The roads are 10-15 years old. That means that infrastructure in rural areas lacks connectivity. You have a highly defragmented market at the bottom with the least infrastructure.

How do we close this gap and provide access to the market for farmers? This is key. In the context of the commercialization of farming, what we have done with ECX’s system is we have created aggregators. We call them cooperatives and unions and they act as commercial size farms. In the West, this is not a problem as every farmer is a commercial farmer. But in Ethiopia, we had to carve out a way to smallholders as participants in the economy. This is because a significant part of our economy is dependent on farming.

Continue reading this interview on The Worldfolio
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