Ayodeji Balogun, the country manager for AFEX commodities exchange, Nigeria’s first private commodities exchange, has decried the policy inertia by government on the current Land Use Act, which he said is hampering the growth of the country’s agricultural sector.
Balogun who said the lack of the right infrastructure to support farmers remains a big concern specifically described the land use act as a single policy action that has the greatest impediment to the growth of agriculture in Nigeria.
“When you look at the laws, the Land Use Act is one of the biggest threat to Agriculture,” Balogun told business a.m. post launch of the Association of Securities Exchange in Nigeria (ASEN), in Lagos last week.
According to him, the nature of Nigeria’s land use act makes it impossible to securitise a land.
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“The process of getting title deeds is extremely cumbersome, the process of gaining access to land for agricultural ventures to establish commercial farms is almost impossible. So we end up having farms that feed the country being less than the size of a football field. Which is a problem when it comes to mechanisation, productivity and also aggregation,” he said.
He also spoke on the operations of the commodity exchange and how deals are closed.
Balogun explained that if a buyer wants to buy a thousand metric tonnes of a product, “what will be needed to facilitate such trade would be a thousand farmers across multiple states, which increases the cost of operation of the exchange and also makes the speed of closing transactions slower.”
AFEX is driven by the vision to create lasting institutions that will capitalise on Africa’s agricultural potential, support African farmers, achieve food security provide energy security and improve Africa’s overall global trade competitiveness. It engages in stages of securing storage, providing finance and trading agricultural produce.
AFEX is also one of the five securities exchanges, which came together last week in the formation of ASEN, Nigeria’s first securities exchange association.
Fortunately, ASEN with the backing of the Securities and Exchange Commission (SEC) and the capital market committee of the National Assembly brings the enablement of a synergized voice to advocate for market-friendly and economic developing policies.
According to Oscar Onyema, appointed ASEN’s chairman board of trustees, the association will be a strong advocacy voice, to project the view of the exchanges perspective in various policies that are being made. ASEN will also push for market-friendly policies, Onyema said.
The SEC’s acting director general Mary Uduk, while pledging the Commission’s full support towards the success of ASEN, urged a close working relationship among member exchanges to enable the market to reap huge benefits of the collaborative efforts from the individual securities exchanges.
Assuring the market of the backing from the entire National Assembly, Yusuf Tajudeen (Hon) chairman, House of Representatives committee on capital markets and institutions during the launch of ASEN said “As a committee that I am privileged to chair, we will be available where the laws require tinkering and when we are required to look into things that will strengthen this association so as to stop being a potentially big market and become a big market indeed.”
The conscious development of Nigeria’s Agriculture sector, as well as other markets to a level where it can adequately shield the economy from the vulnerability of oil price and production shocks, is no easy task. However, a speedy resolution to regulations and laws that have been proven to be hindrances to achieving success will be a step closer towards sustainable economic growth.