Malawi is unusual in having two active commodity exchanges (Comex): The Agricultural Commodity Exchange (ACE), established 2006, and Auction Holdings Commodity Exchange (AHCX) Ltd., established in 2013. In addition, Malawi has several parallel systems that advance collateral financing using warehouse receipts.
Policy Note 33 distills the findings of Working Paper 25, which analysed how Malawi's two agricultural commodity exchanges and warehouse receipts operate. After providing a brief overview of international commodity exchange experience, the note describes Malawi’s commodity exchange landscape as well as warehouse receipt systems and collateral financing in Malawi. In addition, it discusses perspectives of market actors and key stakeholders. The policy note concludes with three categories of recommendations on how best to maximize the performance and benefits of the commodity exchanges and warehouse receipts. These suggestions include harmonizing ACE and AHCX’s grading systems and promoting collateral management as an alternative income stream for Comex to commissions and fees. More controversially, it proposes establishing a single independent body to oversee the Comex and that ACE and AHCX should merge into a single exchange.
Authors: Bob Baulch, with Adam Gross, Justice Chimgonda Nkhoma, and Chikumbutso Mtemwa, 2019.
Click here to read and download the full Policy Note.
Other resources:
- AGRA-GIZ seminar on Strengthening Structured Markets in Malawi, August 28, 2018: The way forward for structured markets in Malawi.
- Op-ed by B. Baulch, September 25, 2018: Will structured markets really deliver higher prices for Malawian farmers?
