Commodity Exchanges and Ware house receipts system Lessons

Commodity Exchanges and Ware house receipts system. Lessons learn’t in Uganda. Presentation by Alex Rwego Supported by the Government of Uganda and the Delegation of the European Commission in Uganda

Current Set up of Grain Production in Uganda • 80% of Uganda population is involved in Agriculture • Grain production dominated by smallholders (subsistence agriculture) • Each smallholder farmer cultivating on approximately 1 -2 hectares of land • Average production yield per hectare is approximately 2000 Kgs Supported by the Government of Uganda and the Delegation of the European Commission in Uganda

Current Set up of Grain Production in Uganda • Poor post-harvest handling at farm gate • Lack of proper storage facilities at farm gate • The two above lead to wet, unclean, and upgraded grain flooding the market at harvest • Marketing of grains is liberalized • Grain marketing chain is dominated by ‘middlemen’ that marginalize farming communities Supported by the Government of Uganda and the Delegation of the European Commission in Uganda

Regional movements of grain Informal Cross border trade Beans Maize Rice Supported by the Government of Uganda and the Delegation of the European Commission in Uganda

Current situation • Kenya is to rely on South Africa, Uganda and Tanzania for maize. • Kenya has received a total of 84, 731 MT of maize and 19, 391 MT beans from Uganda and Tanzania in 2009 • An estimation of 300, 000 MT maize and beans moving to Southern Sudan Supported by the Government of Uganda and the Delegation of the European Commission in Uganda

Addressing Quality and Inspection Issues using Warehouse Receipt System Supported by the Government of Uganda and the Delegation of the European Commission in Uganda

Licensed Storage Facility Supported by the Government of Uganda and the Delegation of the European Commission in Uganda

Processing of unclean, wet and ungraded grain • 3174 MT of Maize crossed from Tanzania to Kenya in May’ 09 through informal cross-border trade Supported by the Government of Uganda and the Delegation of the European Commission in Uganda

Quality Control Supported by the Government of Uganda and the Delegation of the European Commission in Uganda

Warehouse Receipted Stock Supported by the Government of Uganda and the Delegation of the European Commission in Uganda

Issuance of Electronic Warehouse Receipt Supported by the Government of Uganda and the Delegation of the European Commission in Uganda

Brokers trading WR at Exchange Floor Supported by the Government of Uganda and the Delegation of the European Commission in Uganda

Trade Finance in Uganda • UCE has carried out risk mitigation training to 8 commercial banks and Microfinance Support Centre. • Currently 2 commercial banks have signed MOU’s with UCE, developed their product and we are in the process of signing an additional 3 MOU’s. • The Banks will finance 60% of the value of the deposited commodity. Supported by the Government of Uganda and the Delegation of the European Commission in Uganda

Lessons Learn’t in Uganda. • For exchanges to be successful the WRS must be developed along side them. • Enforcement of quality standards. • Building of standardised storage facilities to facilitate domestic, regional and international trade and also address food security issues Supported by the Government of Uganda and the Delegation of the European Commission in Uganda

Lesson learn’t cont’d • Develop Market Information Systems to enhance trade. • Continue to engage the financial sector to finance ware house receipts to create more liquidity in our economies. • Develop commodity exchanges in the region that are interlinked to each other • Promote WRS and carry out intensive training for stakeholders on how to use the system. • Most importantly the government and the private sector should have PPP to build the market infrastructure to develop this system. The donors could play a significant role too. Supported by the Government of Uganda and the Delegation of the European Commission in Uganda

Contacts Alex Rwego Manager, Uganda Commodity Exchange, Tel: 256 -312 -262921/2 Email: alexkr@uce. co. ug Website: www. uce. co. ug Supported by the Government of Uganda and the Delegation of the European Commission in Uganda