FSVC conducted a regional assessment of commodity market development in East Africa focused on national commodity exchange (COMEX) development in Kenya, Tanzania and Uganda, and reviewed systems that drive grain trade, namely regulatory bodies, commodity spot and futures markets, cooperatives societies, grain storage and government incentives to support production. FSVC identified a number of critical hurdles in the EAC, including lack of transparency, limited information availability, and limited access to agricultural credit. These countries have undertaken reforms aimed at establishing national commodities exchanges. FSVC’s program supported these initiatives, and provided technical assistance to help develop fully integrated, modern commodities trading systems that allow both farmers and consumers to benefit from lower transaction costs, price transparency, increased liquidity and assured quality.
FSVC’s program aimed to:
- Promote a better understanding of the current dynamics in food commodity markets;
- Analyze the status and development of commodity exchange markets in key East African countries;
- Review national legal and regulatory frameworks strategic and implementation plans, to determine the functionality and capacities of East African Community (EAC) national Comex(s) and their regulatory environments. Strengthening food security and the efficient functioning of properly-regulated, private sector driven food markets is critical to Kenya and East Africa.
FSVC’s program reviewed the current EAC national regulatory and institutional frameworks, analyzed regional market dynamics/demand; identified needed policy and operational changes; listed and sequenced the types of technical assistance required to effect such changes; and identified best practices that have been successfully introduced in similar markets that improve market transparency, increase competition while promoting inter-connectivity, and improve the efficiency and reliability of agricultural markets.
FSVC’s assessment helped local counterparts in Kenya, Uganda and Tanzania identify gaps and necessary reforms that will transform the COMEX operations, warehouse receipt system development, and oversight and interconnectivity, so that they are able to effectively engage the private sector while operating under an effective supervisory regime run by the public sector. FSVC helped to develop strategic action plans and policy guidelines that laid out all of the development gaps and direct real-world lessons from US, Europe, Africa and India, that could address them.
FSVC’s technical assistance program identified required policy changes and technical assistance required to strengthen emerging commodity exchanges in specific countries; and identify public good aspects of commodity exchanges resulting in market transparency, increased competition, efficiency and reliability of agricultural markets.