ECX starts warehouse receipt finance

Ethiopian Commodity Exchange (ECX) introduces warehouse receipt financing (WRF) in collaboration with the Commercial Bank of Ethiopia (CBE).
The collateralized commodity finance project that initially was introduced by maize at the center at Nekempt and Bure warehouses supported by International Finance Corporation, a private sector wing of the World Bank.
Wondimagegnehu Negera, CEO of ECX, will help maize farmers, cooperatives, traders and processors to store the grain at the electronic trading platform warehouse as collateral to access credit.
The scheme would be managed by CBE, the state owned financial giant that it’s the first financial partner when ECX commence operation 11 years ago, who will provide the finance without any additional collateral when clients handover the good receiving not (GRN) that issued by the branch warehouses at the current stage at Nekempt and Bure.
Yinager Dessie, Governor of National Bank of Ethiopia and Board Chair of ECX said that expanding access to finance is one of the major strategies of the government and the current initiative is part of that.
He reminded that the government decision to provide finance on movable assets as a collateral, a proclamation that ratified by the parliament recently, and the current new initiative of ECX is additional opportunity for access to finance than the traditional unmovable asset based collateral.
“It will support the country agriculture sector and farmers,” he added.
The WRF is expected to solve the working capital shortage that currently actors face.
This is particularly important for farmers who often lack bankable collateral and are therefore forced to sell their crops immediately after harvest when prices tend to be at their lowest, according to the statement of ECX. The loan would be give on three and two months refund period for suppliers and buyers respectively.
According to the statement cooperatives are also expected to be a major beneficiary as they can utilize the warehouse infrastructure to offer improved finance and marketing solutions to their member farmers.
It added that large scale agribusinesses will benefit as well because they can use their inventories to unlock the additional liquidity that can help increase output, product quality and competitiveness.