Interview: Joe Tackie
What is the implementation timeline for the GCX?
JOE TACKIE: Currently, the GCX is on schedule, despite the risks usually associated with any start-up. We are confident we will have the exchange implemented by the second quarter of 2017. It has been a protracted process. The idea was first floated in 2009 and officially launched by then-President John Dramani Mahama in June 2015. We have borrowed ideas from the Ethiopia Commodity Exchange, which was established in April 2008 as the continent’s first such exchange, and as an efficient and transparent platform for buyers and sellers in the sector to meet. Today there are nearly 12 commodity exchanges in Africa, and Ghana is an important part of the pan-African commodities market. We did a comprehensive feasibility study to be certain about what needed to be in place before ringing the first bell. The design phase is complete and all aspects of the GCX have been initiated.
What have been some of the greatest challenges in attracting investors to the GCX?
TACKIE: The biggest challenge that we have had is defining the role of government. The idea from the outset was to have a private sector-led commodities exchange and thus encourage investment from that segment. The GCX has 90% of its investment from the private sector and a 10% public sector stake. There is also a mixed arrangement, with development partners and private sector players in a public-private partnership arrangement that has an immediate willingness to invest in strengthening the GCX ecosystem. The second challenge was perception. In Africa, to date, commodity exchanges have been tried but have not worked, and so scepticism is abundant.
Having a good understanding of what had not worked in other countries, it was important to attract and comfort investors from the outset by ensuring that robust core principles were on display. After completing an extensive analysis, it was found that the key to unlocking liquidity was within the warehouse and receipts system, where small and medium-sized agriculture stakeholders were considered key players buying into the GCX’s concept. A well-structured warehouse, alongside a robust receipts system where benefits from outputs could be quantified, would allow us to achieve efficiency. The concept, in practice, could also provide a seamless interface between the trader, warehouse and GCX.
How will Ghana’s agriculture value chain be affected by the lower demand for commodities?
TACKIE: The situation surrounding the drop in demand for commodities worldwide is challenging a number of economies, including Ghana, which can still do better in terms of adding value. Once Ghana is engaged in exporting more commodities, outside of cocoa, gold and oil, it will be better positioned. It must also address overall consumption and how these figures account for a large percentage of domestic production. There are already certain local production deficits. Post-harvest losses within the agriculture sector average between 40% and 50%. In mid-2016, the figure was 47%, which is unacceptable. This situation enables local demand for the commodity itself to create a lot of activity related to trading.
To what extent will brokerage firms be accessible to smallholder farmers and larger producers?
TACKIE: We have not had an efficient brokerage system in the commodities space to date. We are determined to make it one of the GCX’s key areas of focus. There are challenges in the agriculture value chain, beginning with farmers and ending at the exchange, so there remains a role for the brokerage firms. We need to build awareness, to enable producers to take up confident positions as entities to trade on the GCX. We will have to depend on brokerage firms that will take a role and act on behalf of the producers.