Commodities ecosystem can boost food security, LCFE chief tells FG

Onome Amuge

Nigeria’s food security can be boosted if the government leverages the nation’s commodities ecosystem, Akin Akeredolu-Ale, managing director and chief executive officer of the Lagos Commodities and Futures Exchange (LCFE) has said.

Besides, leveraging the country’s commodities exchange ecosystem can also create jobs and boost FX earnings.

Akin Akeredolu-Ale, the managing director and chief executive officer of the Lagos Commodities and Futures Exchange (LCFE), stated this in an interactive session with journalists in Lagos. He commended the federal government’s efforts at addressing the issue of food insecurity, but noted that greater progress could be made by involving commodities exchanges in the process.

Commodities exchanges can play a key role in increasing agricultural production, improving access to markets, and reducing food prices, all of which can help improve food security in Nigeria.

He said: “Commodities Exchanges connect smallholder farmers in rural areas to large markets. This increases earning income capacity, a key aspect of household food security. They facilitate food storage through their warehouses. Through warehouse receipts smallholder farmers can access input loans to purchase fertilisers and other materials. Commodities exchanges reduce default risks in trading and encourage investment in food systems and they manage price risks in food systems by offering future trading. They disseminate market information that enhances capacity to promote competition, reduce transaction cost and make food available amongst others.”

The Nigerian economy is currently facing multiple challenges that are negatively affecting the country’s food security, he said, noting that these challenges include rising food prices, high transportation costs, insecurity, poor infrastructure, and a volatile foreign exchange market. 

Akeredolu-Ale stressed that these issues have impacted the ability of stakeholders in the commodities sector to produce and transport food to where it is needed, adding that these challenges must be addressed in order to ensure the nation’s food security, and that the federal government should engage commodities exchanges as part of its efforts to do so.

While acknowledging the challenges facing the nation’s food security, he commended the efforts of President Bola Tinubu, his administration, and the governors of Niger and Lagos States. He specifically commended Governor Mohammed Umar Bago of Niger State and Governor Babajide Sanwo-Olu of Lagos State for taking decisive action to secure the nation’s food supply chain.

The LCFE chief pointed to the Lagos Rice Mill as an example of a successful effort to boost food security in Nigeria. He noted that the rice mill, which is the largest in Africa and the third largest in the world, started operations in 2023 and has already produced over 100,000 bags of rice. He also noted that the quality of the rice produced by the mill is on par with any global rice brand being imported into the country.

“Lagos Commodities and Futures Exchange since receiving its licence in 2019, has propagated the need for the investing community to focus on the commodities ecosystem as not only the next gold mine but a route to driving the GDP of the economy from single digit to double digits. LCFE has called for attention to the commodities ecosystem as a $1 trillion economy, rich in agricultural, oil and gas and solid mineral commodities,” he said.

Highlighting the accomplishments of the Lagos-based commodities exchange, he said; “LCFE is the first Exchange in Nigeria to list and trade physical Gold coins called “Eko Gold Coins ” in 2022. Since that time, the Exchange has traded over N66 million worth of Gold through registered Commodity brokers on its Exchange. 

“This novelle digital asset allows investors to invest in as little as 1g of gold coin which listed at 42,500 at initial listing and closed at 65,000 per gramme at the end of February 2024.”

The LCFE CEO stated that the commodities exchange has been actively working on agreements aimed at developing the commodities ecosystem in the country. He highlighted the agreement with the National Coconut Development and Propagative Initiative (NATCODEV) to grow the coconut value chain as one of the major agreements that will contribute to the development of the commodities ecosystem.  He added that the Exchange is working on a proposal for a new rice mill, which is expected to come on stream in the coming months. The mill is expected to further drive the development of the rice value chain, which has been a priority for the Exchange.