Addis Ababa’s Ethiopia Commodity Exchange (ECX) is an example of one of the new breed of commodity exchanges that are springing up around the world. As with other such exchanges, the ECX is designed to combine the best features of a modern commodity exchange with local traditions. Ethiopia in particular has a long history of the trading agricultural goods in markets: the establishment of a cutting edge commodity exchange mindful of local ways of business is a logical step in the country’s economic development.
The Ethiopia Commodity Exchange is one of the newest of the global commodity market’s exchanges, being formed in April 2008. It may serve as an example to other developing nations wishing to found their own commodity exchanges, as it successfully involves all relevant parties (from the global trading community to the government of Ethiopia and local merchants, traders and growers), and reflects local traditions (Ethiopia has a tradition of trading agricultural commodities going back many centuries). Indeed, the mix of commodities traded reflects local as much as international demand, with for example dozens of varieties of Ethiopian coffee traded as commodities. ECX is truly an exchange that serves local needs at the same time as the global market, something other exchanges being founded in developing countries should aspire to.
There are two types of member of the Ethiopia Commodity Exchange:
- Full Member:There is no restriction on period of membership for full members. These members may also trade in any commodity listed on the exchange. Full members tend to be large companies and institutions.
- Limited Member: Limited members of the Ethiopia Commodity Exchange must renew their membership annually, and are only able to trade one commodity. In addition, they are restricted to either buying or selling that commodity, not both. Limited members tend to be smaller organisations, traditional merchants/traders and individual traders.
Each membership type may be further split, into two classes:
- Trading Member: these members may only trade on the exchange on their own behalf.
- Intermediate Member: these members may trade for themselves, or for clients.
Reflecting the agrarian nature of the country in which it is situated, the Ethiopia Commodity Exchange concentrates on agricultural commodities. The commodities traded at the ECX are as follows:
- Coffee: since Ethiopia is generally held to be the place where coffee was first cultivated, it is entirely appropriate that coffee is traded as a commodity on ECX. In fact, dozens coffee contracts are available, each having its own particular contract code/ticker symbol, delivery point and contract specification. Many of these contracts are directly related to the regional varieties that have developed over the millennia comprising Ethiopia’s history of coffee cultivation: major varieties include Harar, Jimma, Sidama and Yirgacheffe.
- Corn (Maize): corn, also known as maize, is one of the world’s primary agricultural commodities, and its importance in the Horn of Africa is increasing as population growth puts pressure on traditional crops. Two corn contracts are traded on MCX: Mixed Maize (contract code: MM) and White Maize (contract code: WM).
- Haricot Beans: haricot bean contracts on the Ethiopian Commodity Exchange are split into two main types, Red Kidney Beans and White Pea Beans:
- Red Kidney Beans: the two contracts available are Processed Red Kidney Beans (contract code: PRKB) and Unprocessed Red Kidney Beans (contract code: URKB).
- White Pea Beans: again, two contracts are available – Processed White Pea Beans (contract code: PWPB) and Unprocessed White Pea Beans (contract code: UWPB).
- Sesame: as with coffee, it is likely that Ethiopia is the place where Sesame was first cultivated. This commodity is still important to the region’s economy, and so contracts for three varieties are offered on ECX: Gondar (contract code: GSS), Humera (contract code: HSS) and Wollega (contract code: WSS).
- Wheat: like maize, wheat is a key foodstuff in Ethiopia and surrounding countries. Three varieties are traded on the Ethiopia Commodity Exchange: Hard Wheat (contract code: HW), Soft Wheat (contract code: SW) and Mixed Wheat (contract code: MW).
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