Kenya is counting on the establishment of a national commodity exchange to protect cross-border traders from exploitation by middlemen.

The proposals, contained in the new Trade Policy, also aim at promoting efficiency in domestic and regional trade, supporting pricing transparency for farmers and traders, as well as attracting more investors and creating jobs. Trade Principal Secretary Chris Kiptoo said preparations were in top gear to put up a commodities exchange by June next year as the country moves to implement agreements made under the northern corridor infrastructure projects.

“A commodity exchange will address supply chain weaknesses where, for example, maize farmers get very little compared to maize flour prices; they are not comparable because of too many parties in between. We want to create a platform that allows the interaction between the supplier and the trader or the consumer directly,” Mr Kiptoo said.

The exchange will involve the use of regional warehouses with modern facilities where farmers and traders can take their products to minimise on storage wastage as well as exploitation by middlemen.

The structure is meant to operate in the larger East African region with Rwanda already running a commodity exchange. Kenya and Uganda are laying legal and infrastructural structures.

Mr Kiptoo said the three countries had agreed on 18 commodities, setting the stage for the start of the venture which holds key to regional trade.

The exchange will also ensure prompt payments in partnership with financial institutions.

“If you take your goods to Kisumu, it will check the quality of the goods and if admitted you will get a receipt which you can discount in a bank and use the goods as collateral,” Mr Kiptoo said.

The Capital Markets Authority will regulate the exchange after the CMA Act was amended to expand its regulatory provision.

Discussions are also underway to incorporate the  Coffee exchange and the East African tea Trade Association based in Mombasa to be part of the wider structure to benefit more traders in the country.

Source: Business Daily