INDUSTRY and Commerce minister, Welshman Ncube is set to meet officials from the Ministry of Agriculture later this month to finalise the setting up of the Commodity Exchange of Zimbabwe (Comez).
Comez is an organised market place where trade, with or without the physical commodities, is funnelled through a single mechanism, allowing for maximum effective competition among buyers and sellers.
Its operation had apparently been stalled by lack of co-ordination between various government bodies and a chronic shortage of funding.
“We are yet to meet with the Agriculture ministry officials but cabinet decided that government should come up with capital to set it up,” said Ncube. “That is why there is the participation of permanent secretaries in the ministries of finance, agriculture, industry.”
An inter-ministerial committee tasked with assessing the operational requirements for setting up Comez had not yet provided feedback on progress made to date.
Delays in setting up the exchange were primarily caused by overlapping mandates and “turf wars” between the envisaged commodity exchange, the Agricultural Marketing Authority and the Ministry of Agriculture, Mechanisation and Irrigation Development.
“Issues centred on the responsibility of marketing the commodities once the exchange was set up and there was a lack of clarity over who was in charge of what,” said Ncube.
He said a Private Public Partnership initiative with financial institutions and other concerned private sector stakeholders would go a long way towards facilitating the smooth functioning of the exchange, in consideration of the prevailing economic challenges.
“Private sector participation is certainly encouraged, as it will be a public company with stakeholders such as financial institutions and other interested institutions,” Ncube said, adding that a prospectus has already been drawn up.
In his budget presentation last week, Finance minister Tendai Biti underscored the importance of setting up Comez, noting how farmers’ fortunes depended on its functionality.
“The commodity exchange must be established next year. Farmers must be able to take their crop to the market and be paid there and then.
Cabinet has spent a lot of time dealing with this issue,” he said.
For agricultural commodities, trading would be on the basis of warehouse receipts issued by the exchange operated or approved warehouses which guarantee quality and quantity of products.
The preceding exchange, the Zimbabwe Agricultural Commodities Exchange, folded in 2001 after the Grain Marketing Board (GMB) was granted a monopoly to purchase wheat and maize.
Market distortions which consequently affected the smooth flow of trade became prevalent as the GMB set the maximum buying and selling prices.
GMB monopoly ended in 2009 following the market liberalisation that came with the inclusive government.
The exchange would also maintain a system of market surveillance where experts monitor market player’s behaviour in order to protect the market from manipulation, speculation and other malpractices.