Friday, March 19, 2021 / 06.30 PM / Ayomide Oguntoye for
WebTV / Header Image Credit: EcoGraphics
Nigeria's leading private commodities
exchange AFEX through its COMX platform hosted a tweet chat in partnership with
Proshare Nigeria on the topic "Making
Gains With Commodity Trade: Cashew And Input Note Focus".
Find below excerpts from the Q&A session of the
What is the significance of the COM X
Platform by AFEX and how is it improving commodities market trading?
- The platform is the first
digital commodities trading platform in the country and it essentially allows
people to gain access to commodities as an asset class for their investment
portfolio, effectively promoting alternative investments that deliver both
significant returns and impact.
- The commodities market
used to be a market with a variety of considerations for players from storage
and logistics infrastructure and the fragmented nature of most value chains in
- With COM X, investors who
want to earn the type of returns that this asset class has to provide, do not
have to worry about that.
You are introducing the cashew and input
notes to the COM X Platform. What are The Notes and How will this deepen the
commodities market in Nigeria?
- AFEX introduced the
Cashew Spot Contract and the Input Notes on the COM X platform last week. The
Cashew Spot Contract (CSCN) is a tradeable instrument, where investors can buy
and lock in a price today, watch for movement in market prices, and sell when
they have a higher price, which gives them a profit on their trade
- The Input Note, however,
is a fixed income product that offers returns of 6% in 180 days (from the 22nd
of March), and the funds raised from the instrument go to finance a farmer to
What value is the COM X platform
inclusion bringing to the Agric commodities ecosystem
- There is amazing potential
in including both products. Cashew for one is one of the agriculture
commodities with the greatest market potential in the world.
- The export value of the
commodity has increased over time, and unlocking finance for the value chain
will ensure continuous expansion of the potential of the Nigerian commodities
ecosystem with regard to the commodity
- The value of the Input
Note is directly to producers as it really allows them to get access to quality
inputs (fertilizers, seeds etc.) in time for the season.
How will this serve the interest of the
Smallholder farmers gain
access to credit and are financially included, enabling them to produce and get
higher yields than they ordinarily would, So the farmer benefits from an
increase in productivity, livelihoods and is also able to draw other farmers
into our programs, which over time helps to lift rural families out of poverty
What opportunities do investors have by
taking advantage of the cashew and Input Notes on the COM X Platform?
- The first opportunity is
simply an opportunity to make returns, very close to that is the necessary
action of helping to diversify your investment portfolio
- Secondly, there is an
opportunity to join an impact investor network that is delivering visible and
sustainable change to rural communities, but also transforming our food systems
in Africa in a way that makes value creation and distribution a norm for all
What are Spot Contracts and Inputs
- Spot Contracts are a type
of contract where an investor buys a product in order to benefit from a price
appreciation over a period of time. Capital appreciation occurs when investors
buy low and sell high, for instance, you buy cashew at the beginning of harvest
season, after some time, it appreciates by certain percentages - that increase
is where the profit lies for the investors.
- The Input Note is a fixed
income product that allows investors to finance a farmer to produce more
commodities with the end goal of making a pre-agreed profit on the investment
after the farmer harvests.
In the era of increasing cyber-risks,
how secure is the COM X Platform for trading commodities in the Nigerian
- The COM X system is very
safe and secure. We have the system designed in such a way that coming onboard
is as seamless as possible, but we designed it with simplicity in mind, meaning
we have two factor authentications for you to log in.
- When you bring your funds
in, it is seamless, but when you take your funds out, we have a robust process
that ensures that checks and balances are carried out on the system. We have
the wallet system designed on the app that ensures your values are always
visible and available to you at all times.
What strategies are in place to increase
awareness of the opportunities in the commodities market?
- We are relying on a lot
of partnerships and building a reliable education bank, where investors can
access quick, easy content on the market and share it with other curious
- We are also increasing
the number of ways that our price data can be accessed, utilizing our website,
social channels and even distribution with media channels to ensure that
investors never have to look too far to find information on the market
What are the optics for cashew nut as a
strategic commodity in Nigeria?
- The demand for African
raw cashew nuts has been on the increase. India and Vietnam account for over
80% of imports from Africa with Ivory Coast, Tanzania, Guinea Bissau and
Nigeria as the major exporting countries
- The high demand for roasted
cashew by Indian consumers and the failing output experienced by farmers in
Vietnam means processors have to depend on imports from Africa to keep their
- Nigeria is the 8th
largest producer of cashew in Africa and has a global market share of about 2%.
Cashew also accounted for about 16% of Nigeria's total exports in the last
- Cashew nuts are therefore
a strategic Agric commodity with a lot of local and export potential for the
With the cashew spot contract and AFEX
Input Notes on the COM X Platform. What are the associated risks for traders
In order to limit the
risks inherent in the product class, a combination of crop insurance policies
and equity contribution by farmers help limit the risk factors and improve the
smooth execution of contractual agreements.
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