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Abuja Commodities Exchange (Reviewed, 14th Sept 2001) Tell your friends about this page! Email it to them.

Brief History

Historically, early attempts to formalise produce marketing in Nigeria can be traced to the 1930s when the European companies such as United Africa Company (UAC), John Holt, Societe Commerciale Occidentale Agency (SCOA) and Peterson Zochonis (PZ) were involved in direct purchases and export of Nigeria’s major agricultural commodities considered as essential raw materials for overseas industries. However, government involvement in organized commodity-marketing dates back to the Second World War, when the West African Produce Control Board was established to stabilize commodity prices. Thus, produce marketing in Nigeria falls into two broad categories, domestic trade in food items that has always been handled mainly by private operators, and the marketing of cash crops, which until 1986 was handled by Commodity Boards, which were monopoly public institutions.

While the prices of food items were freely determined in the market by the forces of supply and demand, government fixed those of cash crops under the Commodity Boards. The Commodity Boards were noted for paying farmers prices that were lower than the world prices and sometimes even lower than their production costs. This difference represented implicit taxation of farm incomes and served as a disincentive to domestic production.

From Stock Exchange to Commodities Exchange

But, the recent conversion of the short-lived and controversial Abuja Stock Exchange (ASE) to a Commodity Exchange is a much-expected fillip in the promotion of non-oil exports. Originally, ASE was set-up sequel to the report of the Dennis Odife led panel that reviewed the Nigerian capital market and suggested the idea of multiple exchanges quite unlike the conventional status quo. Though, a federal commission headed by the late erudite economist Dr. Pius Okigbo had in 1976 recommended a single National Stock Exchange (NSE), which led to the conversion of the Lagos Stock Exchange (LSE) by Act of 1977 to the Nigerian Stock Exchange (NSE).

However, it is pertinent to note the merit of the Odife recommendation, which led to the creation of ASE. It was meant to deal with the seemingly monopolistic tendencies in the market. The controversy was thus ignited when the Security and Exchange Commission (SEC) relying on clause 69 of the Odife paper subsequently directed the NSE to revert to its old name, LSE.

This move was strongly opposed by key players in the Nigerian economic terrain, argument against the establishment of the ASE was hinged on the fact that the existing NSE is not yet deep enough to fully serve its purposes within the economy, so why establish a rival exchange? With intense pressure from interested groups and persons both within the NSE and outside, the Federal Government recapitulated its earlier stand on the ASE and converted it to a Commodity Exchange, a decision that was widely lauded by industry experts.


The new Commodity Exchange is expected to assist the Federal Government in its drive to expand the horizon and contribution of Nigeria’s non-oil exports to the national purse. This it will do through the internationalisation and standardisation of Nigeria’s tradable commodities such as cocoa, sugar, cereals, cotton, rubber and even nonferrous metals. The direct implication of this is the further integration of Nigeria into the global commodities market and more freedom within the local market.

The discovery of oil in the Niger Delta region of the country in the late 1950s gradually pushed the contribution of non-oil export commodities to the background. This is shown by a recent statistic, which highlights a drastic fall in the year 2000, from 3.41% in 1998 to 1.19% in 1999 and to an all time low 0.52% in 2000.

First African Commodity Exchange Limited (FACOMEX) Angling to Take Over

Already, spirited moves by the promoters of First African Commodity Exchange Limited (FACOMEX) have been initiated to take-over facilities of the ACE from inception. There argument centers on the need to incorporate the operation of the global market which favors the private sector and that the ASE will contradict the Governments policy on privatisation.

Thus, the Government is challenged to create massive enlightenment and education about the objectives and roles of the ASE, considering the unwholesome experience of the defunct commodity boards. It must be transparent in its dealings and carry along individual producers of tradable commodities, prospective investors and other participants in the emergent market. ASE must endeavor to learn from the mistakes of the more established Commodity Exchanges in other countries a case in point is the Bourse Du Cacao ET Du Café – BCC otherwise known as the Ivorien Cocoa and Coffee Exchange.

NB: Contact details to be provided soon.


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