Tucci Ivowi, Chief Executive Officer of the GCX, delivered a compelling talk at the World Cocoa Conference in Brussels, Belgium.
Titled “Transforming Africa’s Cocoa Industry: The Case for an African Cocoa Exchange,” Mrs. Ivowi highlighted critical issues plaguing Africa’s cocoa sector and proposed strategic solutions to revolutionize its trajectory.
Africa stands as the undisputed powerhouse in global cocoa production, with approximately 70% of cocoa beans originating from four West African nations: Ivory Coast, Ghana, Nigeria, and Cameroon. However, despite this dominance, the continent grapples with challenges in value addition and equitable pricing, fostering a cycle of impoverishment among cocoa farmers and constraining the economic potential of these resource-rich nations.
Mrs. Ivowi underscored the urgent need for transformative measures, citing the alarming disparity between the immense contributions of these nations to the global cocoa supply chain and their meager revenue share, which barely exceeds 5%. The absence of true price discovery mechanisms within existing marketing systems exacerbates this disparity, increasing the plight of farmers and the fiscal constraints faced by cocoa-producing countries.
In response to these pressing concerns, the International Cocoa Organization (ICCO) has championed the establishment of an African Cocoa Exchange (AfCX). Feasibility studies conducted by the ICCO in 2023 have highlighted the manifold benefits of this initiative, envisioning AfCX as a pivotal regional institution poised to catalyze trade, mitigate risk, and facilitate financing across key cocoa markets in Africa.
Drawing upon lessons gleaned from past endeavours in commodities exchanges, Mrs. Tucci Ivowi emphasized the importance of robust regulatory frameworks, policy interventions, and collaborative efforts to ensure the success of trading cocoa on national or regional commodities exchanges.
She mentioned that in Ghana and Côte d’Ivoire, the cocoa sector is well organized through the marketing boards—the Ghana Cocoa Board and the Conseil de Cacao, respectively. Given this structure, a commodity exchange would be most effective if it integrated with these existing systems.
Citing the transformative impact of the Ethiopian Commodity Exchange (ECX) as an example of successful policy intervention, she articulated the potential for an African Commodity Exchange to propel sustainable cocoa production, economic growth, and enhanced livelihoods for millions of smallholder farmers across the continent, while playing the crucial role of championing intra-regional trade of cocoa.
Key success factors for trading cocoa on a national or regional commodities exchange include government support, regional integration, central involvement of ICCO, global integration, and stakeholder engagement.
Following Mrs. Ivowi’s submission was a panel discussion, moderated by Mr. Viwanou Gnassounou, and which included Mr. Debajyoti Bhattacharyya, AFEX Nigeria, Mr. Vladimir Zientek, Stone X, and Mr. Kingsley Mbah, Afreximbank, as well as Mrs. Tucci Ivowi.
Mr. Mbah from Afrexim Bank emphasized the need to add value to African commodities. Mr. Zientek from Stone X advised against a drastic approach, pointing to the challenges experienced by Singapore, Vietnam, and Colombia, when they tried a similar approach.
Mr. Bhattacharyya from AFEX stressed the importance of hedging instruments to develop Africa’s commodities markets. A key conclusion was that collaboration by all value chain participants would be inimical to the growth of the sector.
