Government must limit its role in the operations of the Ghana Commodities Exchange (GCX) and allow the private sector to become the substantive actors, as any attempt to retain control is likely to stifle its growth.
Mr Mohammed Iddrisu Ngmenipuo, a Commodities Exchange Analyst, explained that the commodities exchanges and related Warehouse Receipt System (WRS) are the highest form of free enterprises, adding; “Their performance impacts all consumers.”
“It is not like stock exchanges, whose actors mostly comprise large companies, investment funds and deep pockets. Any significant market distortion can have serious impact on food security, inflation, and industrial performance”.
Mr Ngmenipuo, who is a senior lecturer in Accounting and Finance at the Wa Polytechnic, was speaking to the Ghana News Agency on the successful launch of the GCX by President Nana Addo Dankwa Akufo-Addo a couple of months ago.
He said the agenda, which forms one of the pillars of the New Patriotic Party’s Election 2016 Manifesto, has been accomplished and that Government’s decision to take promotor risk in rolling-out the platform was highly commendable.
Tracing the genesis of commodities exchange in Ghana, Mr Ngmenipuo said: “Our research shows that among other things, a private company, Commodity Clearing House Limited (CCHL), started the promotion of the exchange and warehouse receipt system, as far back as 1993.”
He said though the journey of the GCX started in 1993 when the CEO of CCHL left England, where he was running a confirming house trading and financing commodities along the West Coast, to establish the company here, it was registered in Ghana in 1996.
“The company had engineered and been involved in the design, institutional development, development of regulatory systems, and capacity building for the ecosystem,” Mr Ngmenipuo said.
He said the initiative was over-shadowed by previous government’s decision to develop a commodities exchange in Ghana without the input of the private sector developers that had invested so much capital and possess huge stock of know-how and experience in such operations.
He said the efforts and commitment of the CCHL showed that even under very difficult environmental inertia to innovation and undeveloped ecosystem, private initiatives promoted by determined Ghanaians could provide positive paradigm shifts for the economy.
Mr Ngmenipuo said the CCHL applied for a license from the Bank of Ghana to develop the commodities market to deal in commodities-related financial instruments, market information, and trade services relating to commodities markets in the country.
“It is documented that for two years, the CCHL organized seminars and workshops at its own cost to develop know-how and capacity within the ecosystem.”
In 1998 CCHL was part of the initiators that arranged for a Common Fund for Commodities grant to form the Grains and Feed Working Group of Ghana (GFWG), comprising local value chain stakeholders and the Ministry of Food and Agriculture to implement a pilot Warehouse Receipt System in Ghana.
To be fair, the Ministry of Trade and Industry, under the previous regime, recognising that the “Ghana Commodity Exchange” had been registered when the GCX Project and about to be launched, entered into negotiations with the CCHL for compensation, he stated.
However, the terms of the compensation tabled by the CCHL could not be honoured before the change of government.
“I understand that the Ministry of Finance, which now has the oversight of the GCX, has executed a compensation agreement with the CCHL via the GCX, which terms are being implemented,” Mr Ngmenipuo said.
“It is not only for the benefit of the Company, but to the affirmation of the Government’s commitment to free enterprise spirit and the expansion and promotion of private sector-led innovation, risk-taking and investment in creating wealth and prosperity for all Ghanaians.”