The Ghana Commodity Exchange (GCX) and Venture Capital Trust Fund (VCTF) have signed a Memorandum of Understanding to work together as part of GCX’s mission of transforming the country’s agricultural value chain.
As part of the MoU, Venture Capital Trust Fund will create a fund under the auspices of the Ministry of Finance to support the aggregation of selected commodities from Ghana. VCTF will leverage its experience in commodity value chain financing to support qualified commodity aggregators to mobilise selected commodities to be traded on GCX.
This partnership is part of the government of Ghana’s efforts to boost food security, encourage youth in agriculture, and support Ghanaian smallholder farmers to improve their livelihoods and increase their incomes.
In a statement, Sampson Akligoh-Director of Financial Sector Division of the Ministry of Finance said: “Government efforts in promoting price discovery and transparency for primary Agricultural commodities is important in unlocking the huge potential of this sector.
“This agreement between the GCX and VCTF will ensure that more progress is made in creating jobs and deepening the ecosystem for the GCX to have more impact on the economy.
“In the first phase, funding will be advanced to 20 selected young agricultural entrepreneurs (Commodity Aggregators) for the mobilisation of selected commodities from over 3,000 Ghanaian farmers, to supply markets in Ghana and West Africa. This is expected to create over 1,200 sustainable jobs in the short- to medium-term, and will multiply as the project progresses.”
VCTF has also agreed to provide essential training for approved businesses and enterprises, as well as support them with the necessary business advisory and technical services – such as accounting, management, business strategy formulation and marketing. Again, VCTF will support the selected entrepreneurs with corporate matching and mentoring through its executive mentoring programme.
Ghana Commodity Exchange, on the other hand, will provide essential quality enhancement services such as cleaning, drying, sorting, to ensure that these commodities meet national and international standards – before storing and subsequently trading them from GCX certified warehouses.
Importantly, GCX has also committed – through the MoU – to act as facilitator to implement the programme. This will be made possible by providing the necessary monitoring and supervision, technical and operational backstopping for quality control; and to ensure strict compliance with GCX standards while providing a ready market for commodities aggregated under the programme.
Furthermore, GCX has agreed to support selected aggregators with the required technical expertise on aggregation strategies, value-chain support tools and the necessary value-chain risk assessment techniques. The Exchange will leverage its expertise in this field so as to make the collaboration successful.
Additionally, as part of this collaboration, both parties have agreed to engage with government to jointly secure the most appropriate funding mechanism for regional commodity aggregation, with the aim of reducing poverty through job and wealth creation. This collaboration will go a long way to create prosperity for all in the agriculture value chain, and make Ghana a regional and global trading hub for all commodities.
“The selected aggregators will potentially become the sort of large off-takers who can contribute positively to the commodity value chain in the country; thus benefitting smallholder farmers in the selected value chains with better prices and larger markets,” said the CEO of GCX, Dr. Kadri Alfah.
The CEO of VCTF, Yaw Owusu-Brempong, had this to say at the signing: “Venture Capital Trust Fund is managing the funds, with an initial GH¢5,000,000 allocated for Phase 1. Technical assistance will also be provided to the brokers, who will be given the opportunity to grow themselves as actors in the agricultural market – moving from small to medium-sized enterprises, while providing ready markets for smallholder farmers”.