Commodities exchanges play important roles in emerging economies. Of the world’s top 10 commodity exchanges, 6 are from emerging markets. This highlights the importance of commodity exchanges as highly efficient platforms for buyers and sellers to meet; primarily to manage their price risks better, but also to improve the marketing of their physical products. They have significant, well-documented benefits, making economies more inclusive, boosting the links between agriculture and finance, and making the commodity sector more efficient and competitive.
Challenges with setting up centralised exchanges
Many attempts to set up commodities exchanges in emerging markets have failed. In Africa alone, out of 28 exchange projects, only two are in operations. The most successful is Johannesburg in South Africa. The second is the Ethiopia Commodity Exchange. However, the scope is narrow (mainly coffee and sesame) and volumes are still relatively low after 7 years in operations.