ADDIS ABABA (The Economist)―On the walls of the Ethiopia Commodity Exchange (ECX) in Addis Ababa, the capital, hang glossy black-and-white photographs of provincial market towns and rustic life. For the merchants and brokers striding across its high-tech trading floor they serve as a reminder that the ECX, sub-Saharan Africa’s most modern commodity exchange outside Johannesburg, exists for a simple, practical purpose: to transform Ethiopian agriculture.
It has some way to go. By connecting smallholder farmers to global markets, the exchange, launched with a fanfare in 2008, was supposed to help reduce hunger. The hope was it would reduce price volatility and incentivise farmers to plant crops. But staple foods such as haricot beans today account for less than 10% of its trade. Its annual turnover—worth about $1bn—is dominated instead by two export crops, coffee and sesame seeds. In 2015, despite a dire drought, Ethiopia did avoid famine, but the ECX played little role: its maize and wheat contracts had lapsed by then because of concerns that exports would jeopardise domestic food supplies. Cutting out middlemen seems not to have done much for smallholders: studies suggest that the share of international prices received by coffee farmers has barely budged over the past decade. Exporters complain about government price-meddling.
The ECX’s founder, Eleni Gabre-Madhin, who left the exchange in 2012, worries that momentum has been lost. The exchange remains restricted to simple spot-trading. Futures contracts, which help traders manage price fluctuations, were supposed to be introduced within five years, but are still some way off.
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