Ethiopian Review

ADDIS ABABA, ETHIOPIA — In a move that hands over responsibility for sesame trading exclusively to the Ethiopian Commodity Exchange (ECX), the Ministry of Agriculture and Rural Development (MoARD) is preparing to endorse a new ECX mandate, before the coming harvest season which begins in October 2009.

Sesame is the second largest export crop in Ethiopia and is growing in importance as a foreign exchange earner. Last fiscal year, the country exported 300 million dollars worth of sesame to Far Eastern and European markets.

Africa’s largest sesame exporter, Ethiopia began trading the seed through a new electronic system at its commodity exchange for the first time in early May this year.

Until now, 95 per cent of the sesame crop has been traded individually by small scale farmers with only a small percentage traded through the ECX, on a trial basis.

But the change will mean traders will buy and sell the seed on the trading floor in the same way as the country’s largest export item, coffee.

State Minister of MoARD, Yakob Yala, discussed the draft directive with exchange members and sesame traders last Thursday, but traders and exporters decided to postpone the discussions by a week.

An exporter and member of ECX explained the move saying “We want to read and know the directive terms before we discuss them with the government,”

He said that before fully endorsing the directive they needed to comment fully on the content.
The meeting concluded without agreement, but will continue on Tuesday.

Participants at the meeting told Capital that the directive has both positive and negative impacts on the product trading, commenting that the country’s sesame product is mostly harvesting in the North-West part of the country which is close to the Sudanese border. They expressed concerns that this could lead to illegal trading.

“The product will cross the boarder illegally like other products such as pulses and oil seeds because of the directive,” said one exporter. He was also anxious about the effect the ECX had had on the coffee industry, and its fall in value over the last fiscal year.

It is expected that the ministry will endorse the directive within the next few weeks, according to sources at the exchange centre, and sesame growers are anxious to negotiate the best trading environment for this promising crop.

At the end of last year, the Ethiopian Government handed coffee trading over to the ECX. In the same budget year, coffee exports declined by 200 million dollars after revenues were mediated by exchange trading.

Ethiopia is the fourth largest exporter of sesame in the world, with the country’s product renowned for its quality.

ECX is a domestic market system linking local suppliers with exporters and other buyers. The trading bell first rang on the trading floor of the ECX in April, 2008. When it began, the exchange traded wheat, maize and haricot beans, taking on coffee trading on December 2, 2008. By May 2009, the ECX had traded about 90,000 tons of coffee, valued at over 200 million dollars.

In related development, the National Exchange Actors Association (NEAA), a group formed by members of the commodity exchange traders will become active in the coming to weeks.

Last Friday ECX members elected seven representatives to join a committee that will facilitate the board election in two weeks.

Nefisa Ahmed, assistant general manager of KAS International Trading PLC and member of the committee told Capital that the board will include all kind of traders.

Currently, there are 97 full members, whose membership seat is permanent and freely transferable, and who can trade in any commodity. There are also 391 limited members, a category that accommodates smaller actors, whose membership seat is limited to one year, to one commodity, and to one position (either buy only or sell only).

Alongside the development of the ECX and the regulatory body, the NEAA will play a vital role upholding and maintaining the standards of integrity, professionalism, and skills of all exchange actors.
The NEAA will keep a database of exchange actors and be responsible for developing; commodity marketing and ECX training standards and proficiency testing. They will also work on self-audit programs for members to enforce compliance with relevant ECX rules and directives governing accounting, financial standards, and trading practices. A directory for complaints public filed against exchange actors will be publicly accessible. Another key role is to raise the profile of the ECX through media sensitisation aimed at policymakers, stakeholder groups, students and exchange traders.

- By Muluken Yewondwossen | The Capital