Ncube, agricultural officials to finalise setting up of Comez
November 18, 2012 in Business
INDUSTRY and Commerce minister, Welshman Ncube is set to meet officials from
the Ministry of Agriculture later this month to finalise the setting up of
the Commodity Exchange of Zimbabwe (Comez).
KUDZAI CHIMHANGWA
Comez is an organised market place where trade, with or without the physical
commodities, is funnelled through a single mechanism, allowing for maximum
effective competition among buyers and sellers.
Its operation had apparently been stalled by lack of co-ordination between
various government bodies and a chronic shortage of funding.
“We are yet to meet with the Agriculture ministry officials but cabinet
decided that government should come up with capital to set it up,” said
Ncube. “That is why there is the participation of permanent secretaries in
the ministries of finance, agriculture, industry.”
An inter-ministerial committee tasked with assessing the operational
requirements for setting up Comez had not yet provided feedback on progress
made to date.
Delays in setting up the exchange were primarily caused by overlapping
mandates and “turf wars” between the envisaged commodity exchange, the
Agricultural Marketing Authority and the Ministry of Agriculture,
Mechanisation and Irrigation Development.
“Issues centred on the responsibility of marketing the commodities once the
exchange was set up and there was a lack of clarity over who was in charge
of what,” said Ncube.
He said a Private Public Partnership initiative with financial institutions
and other concerned private sector stakeholders would go a long way towards
facilitating the smooth functioning of the exchange, in consideration of the
prevailing economic challenges.
“Private sector participation is certainly encouraged, as it will be a
public company with stakeholders such as financial institutions and other
interested institutions,” Ncube said, adding that a prospectus has already
been drawn up.
In his budget presentation last week, Finance minister Tendai Biti
underscored the importance of setting up Comez, noting how farmers’ fortunes
depended on its functionality.
“The commodity exchange must be established next year. Farmers must be able
to take their crop to the market and be paid there and then.
Cabinet has spent a lot of time dealing with this issue,” he said.
For agricultural commodities, trading would be on the basis of warehouse
receipts issued by the exchange operated or approved warehouses which
guarantee quality and quantity of products.
The preceding exchange, the Zimbabwe Agricultural Commodities Exchange,
folded in 2001 after the Grain Marketing Board (GMB) was granted a monopoly
to purchase wheat and maize.
Market distortions which consequently affected the smooth flow of trade
became prevalent as the GMB set the maximum buying and selling prices.
GMB monopoly ended in 2009 following the market liberalisation that came
with the inclusive government.
The exchange would also maintain a system of market surveillance where
experts monitor market player’s behaviour in order to protect the market
from manipulation, speculation and other malpractices.