|AFEX Commodities Index|
The AFEX Commodities Index (ACI) is designed to, provide an avenue to track prices of commodities in Nigeria, create an investable investment class for savvy investors and those seeking exposure to the commodities market as well as to reflect the physical commodities market dynamics. AFEX employs a proactive, market led approach to collation and dissemination of commodities prices in Nigeria. The index is based on physical agricultural commodities, is transparent and rules based, eluding to a reliable reflection of commodities prices
|Exchange Traded Commodity|
The Exchange Traded Commodity (ETC) is listed on the AFEX Commodities Exchange. It is a commodity backed asset, traded like a stock. It tracks and replicate the return on the ACI. The ETC, provides a transparent channel for investors whilst also ensuring availability of all year supply of raw materials for processing companies at a competitive rate.
Access to quality inputs in a timely manner is pivotal to a successful farming season. Farmers are usually burdened with high cost of inputs with little or no access to financing. However, there is a constraint on avenues to effectively channel funds, from the retail and institutional investors, into the sector. Most of the funding available are in the form of subsidy, which is not sustainable. This mismatch of structure - need and use of fund; has necessitated the need to structure products that effectively profile farmers, dimension input requirements, provide adequate financing and ensure full recovery in an efficient manner. AFEX arranges for financing with interested lenders - MFBs, Finance Houses and Agri-FinTechs, registers new or existing farmers, and facilitates input financing from interested lenders, ensures training of farmers, coordination of input delivery, farm monitoring and reporting, commodity aggregation, delivery to buyer and payment settlement.
|Storage & Aggregation Services|
AFEX has storage facilities located in farming communities as a means of reducing transaction costs to farmers, whilst guaranteeing availability of produce for buyers. This is a key value proposition as several farming communities are mostly required to fill the orders of a single large buyer. Aggregation is a value add to the buyer as it reduces their transaction costs due to availability of a single point of purchase.
Processors are not left out of the financing challenge as the cost of financing inventory proves quite high for them. These group of value chain players are tasked with ensuring availability of raw materials, all through the season, with heavy investment on physical storage infrastructure. To ensure availability of finance for the processors and ensure the appropriate volume of commodity is available for production, AFEX leverages its storage experience to provide collateral management services. This service provides a layer of comfort for the financing institution and ensures availability of raw materials for the buyer.
AFEX actively engages with manufacturing firms to provide forward prices sellers can buy in to and obtain some form of up front payment.
This transaction sits on the Electronic Warehouse Receipt platform of AFEX and provides oversight for the financing firm on the volume of stock in its coffers. A financing institution can buy into this and on maturity of the contract, releases the produce to the buyer and receive the value, triggering the final payment to the supplier of the commodity. For the success of this transaction, AFEX warehouses the commodity till the maturity of the contract and ensures quality and quantity guaranteed all through the period.
This is a financing solution for manufacturing firms. This solution frees up cash flow for the firm and guarantees availability of stock for consumption through the season. Here, the financier and manufacturing firm pre-agree on the repo rate to transact with and AFEX, acting as the collateral manager, oversees and guarantees the quality and quantity of the stock for the financier. The commodity can either be stored in any of AFEX's warehouse or with the manufacturer.