In a signing ceremony which was held on Wednesday, March 4, 2020, at the AFEX Commodities Exchange Limited (AFEX) offices in Abuja, FMDQ Holdings PLC (FMDQ Group) and AFEX formalised their partnership by executing a Memorandum of Understanding (MoU), solidifying their mutual interest in developing products to deepen the Nigerian capital market.
The collaboration between FMDQ and AFEX recognises the importance of product innovation to market development and encouraging participation of a wider swathe of investors in the capital market. Holding the promise for developing new markets, the partnership will help deliver new initiatives focused on deeping the Nigerian capital market.
Key on the roster of positive impact that will stem from the partnership between the two Securities and Exchange Commission (“SEC”)’s-registered Exchanges is the unlocking of additional sources of finance for the agriculture sector in Nigeria. Products developed under this new partnership will support innovative financing structures for the sector that will leverage AFEX’s established infrastructure and supply chain network and FMDQ’s extensive experience as innovators in the Nigerian financial markets.
Speaking to stakeholders present at the signing ceremony, Mr. Ayodeji Balogun, Chief Executive Officer of AFEX, said ”AFEX is on a path to building Africa’s second commodities derivative market, and this partnership sets the tone for that journey. We are extremely proud to be collaborating with FMDQ, as this helps our goal of increasing our product offerings to investors. We see a clear path to product innovation that will unlock a wider range of products that are able to be traded within Nigeria’s capital markets, promoting broad-based wealth creation that’s accessible to every Nigerian.”
According to the Chief Executive Officer, FMDQ Group, Mr. Bola Onadele. Koko, “We are delighted to announce this collaboration agreement between FMDQ and AFEX. As members of the SEC’s Implementation Committee on Commodities Trading Ecosystem, an area of focus for this partnership will be the Nigerian Agricultural Commodities Ecosystem. Our goal at FMDQ is to support the growth of the sector through commercial and market-driven propositions. Through the partnership, we will be introducing new products aimed at de-risking the value chain, attracting capital market funding to the sector and diversifying the existing products available to investors in this space.”
In the course of the event, both parties reiterated the need for continuous cooperation, alluding to the frontloading of relevant initiatives and campaigns to educate the market on the results of product and market development activities.
FMDQ Group is Africa’s first vertically integrated financial market infrastructure (FMI) group, strategically positioned to provide seamless execution, clearing and settlement of financial market transactions through its wholly owned subsidiaries – FMDQ Securities Exchange Limited, FMDQ Clear Limited and FMDQ Depository Limited – towards transforming the Nigerian financial markets through its “GOLD” (Global Competitiveness, Operational Excellence, Liquidity and Diversity) Agenda.
With a vision to be the leading African builder of ecosystems of financial infrastructure and services for markets and a mission to collaborate to empower markets for economic progress towards delivering prosperity, FMDQ operates the largest Exchange in Nigeria, with an average annual market turnover of circa ₦233.00 trillion over the last six (6) years, as well as the only Central Clearing House in Nigeria positioned to transition to a Central Counterparty, and one of the Depositories in the country.
Since its founding in 2014, AFEX Commodities Exchange Limited has developed and deployed a viable commodities exchange model for the West African market. AFEX has built a strong supply chain infrastructure to support the securitisation of agricultural products.
AFEX operates 45 warehouses in Nigeria’s key grain-producing areas and accounts for 100,000 MT of total national storage capacity. Since 2014, the exchange has reached 106,000 farmers and traded 126,400 MT of commodities with a total turnover of NGN14.1 billion.
AFEX’s mission is to support Africa’s food security while promoting fair exchange of value among players in agricultural value chains. To achieve this goal, AFEX looks to drive financial inclusion for rural communities, develop technology for data collection and market access and introduce products that de-risk the sector and enable the deployment of capital.