GCX operating in the dark

Seven months ago, the Ghana Commodities Exchange (GCX) was launched amid much pomp and pageantry. Indeed, it was formally launched by President Nana Akuffo Addo himself who correctly asserted that the new institution had the potential to dramatically improve the efficiency of agricultural commodity trading in Ghana, guaranteeing farmers markets for their produce and ensuring efficient price discovery.

Since then though, little has been heard of the activities that are taking place on the GCX. Indeed, even basic trading information only started being put on the Exchange’s website a couple of months ago. Even though trading is still only restricted to maize, rather than the range of crops, it is supposed to provide a platform to trade in, transparency in maize trading is a crucial requisite for its subsequent success in trading other crops eventually.

This is both surprising and disappointing and holds the threat of wasting much of the huge potential the GCX presents. Indeed, following the deluge of positive publicity and consequent public goodwill that accompanied its launch, the innovative new commodity exchange – supposedly the first such institution in the whole of West Africa – has subsequently slipped off the public’s radar. We fear it is at best only on the fringes of the agricultural enterprises that it is supposed to provide a trading platform for as well.

We reminisce that when the GCX began trading and very little trading information was made available, this newspaper called for it to make such information available to the public as any commodity or stock exchange is supposed to do. At the time we expected an immediate response, but it has taken several months for this to happen.

However, even though belated, we congratulate the GCX on its beginning to make trading information publicly available as this crucial to its effort to fulfill the objectives of setting it up in the first place. We now hope that the information being provided will be made more timely and more detailed.

At the same time, however, we cannot but question the commitment and the capacity of the Securities and Exchange Commission ( SEC) to its task of regulating the GCX. To be sure the SEC has been busy over the past few months trying to improve the conduct of the capital market, its long standing, traditional terrain and we recognize that this is of crucial importance, especially in the wake of the regulatory challenges facing the banking industry in recent times.

But this is no excuse for leaving the GCX to operate almost completely in the dark during its first months of operation. It shows a certain lack of commitment on the part of the regulator, and we wonder whether or not this is accompanied by a lack of capacity as well.

Whatever the causes of this unsavoury situation, we call on SEC and the GCX itself to up their game. The GCX holds enormous potential to unlock value in Ghana’s agricultural sector, but for this to happen, farming enterprises need to see reason to use it. This can only happen if they receive information requisite for taking up trading positions.

Indeed, there is still the urgent need to sensitize them much further on how it works and how they can benefit.

For now, the GCX seems to be operating as a most esoteric institution, used by very few enterprises. This is not what it was designed to be and is not how it can fulfill its laudable objectives.