Malawi has a unique commodity exchange (Comex) landscape with two commodity exchanges: the Agriculture Commodity Exchange (ACE) and Auction Holdings Commodity Exchange (AHCX). The country also has two Warehouse Receipts Systems (WRS) plus a parallel system of direct collateral financing through commercial banks. The volumes traded on the Comex and WRS are only a small proportion of total throughput and turnover for processors and large traders, who view the Comex and WRS as useful supplements to their main channels of procurement and financing. Using a mixed methods approach, this study aims to understand how Malawi's two agricultural commodity exchanges operate and co-exist, in addition to proposing ways for them to maximize their performance and benefits to key stakeholders. Recommendations highlighted in this working paper include harmonizing the two exchanges' grading systems, enforcing regulations against own-account trading, promoting collateral management as an alternative income stream to commissions/ fees, and establishing a single independent WRS. More controversially, it is argued that to promote financial viability, ACE and AHCX should merge into a single exchange, with an independent body established to oversee the unified exchange.
Authors: Bob Baulch with Adam Gross, Justice Chimgonda Nkhoma and Chikumbutso Mtemwa, 2018
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