The Securities and Exchange Commission (SEC) is working in collaboration with the Ministry of Mines and Steel Development to tackle myriads of problems faced by the solid minerals sector through the commodities exchanges in Nigeria.
The Director-General of the SEC, Lamido Yuguda during a meeting with the Minister of State for Solid Minerals, Dr. Uchechukwu Ogah, in Abuja the nation capital, at the weekend, stated that the core function of a commodity exchange is to create markets by providing a setting, where multiple buyers and sellers can trade commodity-linked contracts, thereby reducing costs associated with finding a buyer or seller with whom to transact.
He listed other benefits of a commodity exchange to include improved quality, standardisation, traceability (tracking the source of every solid mineral), price discovery, price risk management, accepted dispute resolution procedures and facilitating provision of commodity financing.
However, he pointed out that Nigeria has been confronted by significant threats in the last couple of years, which include, structural fiscal challenges underlined by heavy reliance on crude oil for revenue, youth unemployment and increasing insecurity.
He lamented that the worrisome situation has been exacerbated by the pandemic.
He assured that the Federal Government is growing its agricultural and solid minerals sectors as a catalyst for economic growth and diversification to address these challenges.
In the same vein, the commission also set up a market-wide technical committee to undertake a holistic assessment of the existing framework of the Nigeria commodity ecosystem to complement government efforts and deepen the capital market,
He said the committee grouped its recommendations in phases, stating that in the first phase, the objective is to ensure food sufficiency and security, price discovery and market development while in the second phase, focus would include developing strong trades in export commodities.
Yuguda said the third phase should see the introduction of solid minerals, energy and derivatives while the last phase should be geared towards ensuring strong international presence in the local exchanges.
Additionally, he assured that the commission is actively promoting development of the commodities market, especially in areas of Nigeria’s comparative advantage such as solid minerals and agriculture.
