Commodities Contribute 70% to Nigeria’s GDP, says LCFE

The Lagos Commodities and Futures Exchange has said commodities contribute about 70 per cent to Nigeria’s Gross Domestic Product.

Mr Akin Akeredolu-Ale, the Managing Director and Chief Executive Officer, said this on Friday while restating the LCFE’s commitment to advocacy as a strategy to create awareness on how the commodities exchange could grow the nation’s GDP in 2022, according to a statement.

He commended the Central Bank of Nigeria and the Securities and Exchange Commission on their roles in ensuring the uptrend of activities in the Nigerian commodities ecosystem.

He, however, highlighted the need to address the dearth of fungible instruments and put a proper risk management structure in place to activate trading in the ecosystem.

During an interactive session with journalists in Lagos on ‘LCFE’s journey so far and outlook for 2022’, Akeredolu-Ale explained that for commodities ecosystem to thrive and contribute to a country’s economic growth and development, instruments had to be created.

He said, “Nigeria must have a full structure in place for commodities exchanges to operate optimally. It is like a green field in Nigeria. A lot of participants are used to trading equity and fixed income securities. At LCFE, our outlook for 2022 is more on advocacy to encourage trading in this Ecosystem, particularly our teaming youth population. We have fungible instruments.

“We have commenced proof of concept trade as preparation to full trade. Commodities contribute about 70 per cent to Nigeria’s Gross Domestic Product. The industry generates 80 per cent of employment. The focus of foreign countries on Nigeria and Africa is commodities and most of the time, not infrastructure.

He said the LCFE was already working on guidelines and frameworks for commodities notes, the listing of Exchange Traded Funds, cold chain and logistics investments, stakeholders’ engagement and strategic partnerships.

Dr Allwell Umunnaehila, the Head of Operations,  said some of the milestones of LCFE in the short period of its existence included on-boarding of dealing member firms, settlement banks, signing of Service Level Agreement with NIBSS and collateral managers, the commencement of trades, and establishment of rules for private and public listings.