AFEX, NG Clearing to Unlock $500m Commodity Derivatives in Nigeria 

Oluchi Chibuzor

AFEX Commodity Exchange, and NG Clearing Limited, have signed an agreement to develop the infrastructure that would facilitate trading and central clearing of futures contracts for commodities such as cocoa, paddy rice, maize, and soybean in Nigeria. 

To achieve this goal, AFEX emphasised it looks to introduce products that de-risk the sector and drive financial inclusion for rural communities and the commodity markets worth over $500 million.

The signing ceremony, according to both firms, formalized the commencement of a partnership aimed at transforming the agricultural value chain in the country.

Equally they maintained the partnership is coming at a time when unlocking value in Nigeria’s agricultural sector is at the front burner of government initiatives. 

In their speech, the CEO of AFEX, Ayodeji Balogun, and the CEO of NG Clearing, Mr. Tapas Das, noted that the agreement was a precursor to the development of technological infrastructure and the introduction of commodity futures in Nigeria.

Balogun highlighted the significance of the agreement in light of AFEX’s mission of being a reference point for commodities in Africa. 

According to him, “we share a drive with market regulators and other players in Nigeria’s capital market to deepen the market and unlock financing options and alternative investment classes for players in the commodities ecosystem. This collaboration with NG Clearing is a new leap for the financial market in the country that further opens opportunities for generating shared prosperity through the commodity market. We believe that this would further position the country as a preferred capital destination with a viable path of effectively managing risks in key sectors of the economy.”

Reacting, Das said that the partnership would unlock the untapped potential of commodity derivatives in Nigeria.

He stated, “As the central counterparty, we bring confidence and trust to the market as we will be guaranteeing the execution of the trades through our resilient collateral management processes.” 

The AFEX boss said that current trading commodities such as cocoa, maize, paddy rice, and others are limited to the spot and OTC markets.