Government will soon commission a special study to explore the possibility and viability of trading cocoa on the Ghana Commodities Exchange and convert COCOBOD to an active participant in the cocoa value chain at the global level, Senior Minister Yaw Osafo-Maafo has said.
This, he said, will be a major and priority policy shift of government going forward.
According to the Senior Minister, the Ghana Commodities Exchange must become a means of unleashing the embedded economic potentials of our commodities.
He added that empirical evidence suggests that Commodities Exchanges are more efficient than Marketing Boards, and most countries have replaced their marketing boards with exchanges.
“Tanzania, Ethiopia and South Africa are typical examples. We are aware that Malaysia, the leading producer of palm oil in the world, has set up a Commodities Exchange in Kuala Lumpur solely dedicated to palm oil marketing and financing.
“The exchange has become so efficient that world palm oil prices are now quoted from Kuala Lumpur rather than from world financial centres like London or New York. We are informed that palm oil from Indonesia and neighbouring countries passes through the Exchange in Malaysia; can we do same in Ghana?”
Speaking at the 3rd Capital Market Conference of the Securities and Exchange Commission (SEC) held in Accra on the theme ‘Ghana Beyond Aid: The Role of Capital Market’, the Senior Minister charged the SEC to respond to government’s call to create innovative strategies for raising capital to support agricultural investments.
The Capital Market conference engaged policymakers and other stakeholders who deliberated on the country’s long-term financial market and how best to anchor Ghana’s economic development agenda. It also engaged in policy discourse and performance evaluation of the SEC.
Speaking on the theme, Chairman of the SEC Dr. Yeboah Amoa noted that Ghana can use the capital market to industrialise, finance the country’s huge infrastructure gap, and turn ideas into marketable products of global dimensions.
He said policymakers must make the capital market the fulcrum of Ghana’s economic development agenda – adding that without robust long-term financial market support, its implementation will not come to fruition.
“No nation has used bank loans or short-term funds to industrialise. They have always depended on either bank-based or stock exchange-based capital markets to industrialise. It is time for this country to seriously turn to the capital markets for its industrialisation,” said Dr. Amoa.
Dr. Amoa also revealed that the SEC has strategically sought to link every sector of the national economy to the capital market, particularly in the area of funding.
He said: “We have conducted feasibility studies and provided a robust legal and regulatory framework to facilitate the establishment and operation of the Ghana Alternatives Exchange (GAX), an alternative capital raising and trading platform dedicated solely to SMEs. We hope to see cocoa being traded as new contracts on the exchange in the near-future. Empirical evidence supports the notion that it is better and more efficient than using marketing boards”.