A newly established electronic agricultural commodity platform, the Zimbabwe Mercantile Xchange (ZMX), has the potential to provide a doorway for increased private sector investment into agriculture, as stated by a senior official.
According to the chief executive officer Collen Tapfumaneyi under the Escrow group that operates the newly introduced commodity exchange, the platform may attract the much needed investment into the strategically crucial industry and the platform’s main objective is to bring together producers and buyers of agricultural products both local and foreign, in a cost effective and efficient way.
During an interview, Mr Tapfumaneyi highlighted that the ZMX platform is not only limited to trading alone but can also facilitate issuance of warehouse receipts that can stand in as collateral for loans.
‘‘We are currently looking at securitising commodities for them to become instruments that can be acceptable in the financial services sector and the gap is there, as we speak banks want to fund agriculture.
But how do they secure their interest?
‘‘There is a very strong legal framework that supports everything we will be doing. The warehouse receipt system itself is anchored on very strong legislation.
We have the Warehouse Receipt Act and warehouse regulations, that is what gives confidence to financial services sector to then participate in funding agriculture,’’ said Tapfumaneyi.
He further added that the platform provides intermediation or infrastructure that will actually enable funding into agriculture by the financing institutions, and how there has been immense positivity from banks and warehouse operators such as TLS and the GMB, who are interested on coming aboard.
As highlighted by ZMX, warehouse receipt holders will use the stored commodity as collateral to secure a loan to finance household, working capital or investments.
Through the digital channels the holder can request to pledge their commodities and the banks will have access to remotely accept or decline these pledges.
ZMX has a network of certified warehouses around Zimbabwe that function as delivery centres as means support the demands of the commodities traded and financed on the exchange.
The platform will pat onto the high mobile money technology penetration amongst Zimbabweans as it provides accessibility through known platforms like USSD, web portals and mobile applications.