A Nigerian startup is developing a new agricultural commodities exchange in Africa’s most populous country to take advantage of the government’s efforts to boost farming output to reduce reliance on oil.
The exchange, Integrated Produce City Ltd., will be located near the southern city of Benin, about 300 kilometers (186 miles) east of Lagos, Nigeria’s commercial hub, a site accessible to nearby growers of cocoa, palm oil, rubber and cassava, Chief Executive Officer Pat Utomi said in an interview.
“The concept of a wholesale-produce market is to enable the farmer to fully dispose of his produce, instead of today where he loses 80 percent of his output” that rots before it can reach the market, Utomi said on Aug. 18 in the capital, Abuja.
Nigeria is boosting investment in agriculture to increase exports and cut food imports that cost it $3.2 billion in 2015, according to the National Bureau of Statistics. The economy of Africa’s biggest oil producer has been hit hard by lower output and prices of crude, which accounts for more than 90 percent of foreign income and two thirds of government revenue.
Integrated Produce City will have storage facilities, including refrigerated warehouses, and host processing plants on its 100-hectare (247-acre) site in Edo state’s Ugbokun village when it starts operating by the end of 2018, Utomi said. “It will be an export hub for produce,” where exporters will have access to large quantities stored in one place rather than sending agents to individual farmers to collect small amounts, he said.
The company has put up 20 percent of the required $135 million and is in talks with lenders and investors from South Africa, China and Australia for additional capital, Utomi said, declining to name them. Integrated Produce City signed an agreement with KPMG LLP’s Nigerian unit on Monday to help it raise more capital, Vitus Akudinobi, a spokesman for the new exchange, said.
Cocoa, palm produce, cashew nuts and rubber are among the products to be traded on the exchange. Others are fresh fruit and vegetables, grains and tubers such as cassava and yams. Local manufacturing companies will be able to buy agricultural goods at the exchange, he said.
“Among the factories we’re trying to attract are chocolate makers,” he said. “The entire cocoa value chain will be represented.”
The exchange aims to provide services to six states in southern Nigeria, Utomi said.
A likely rival is Abuja-based Afex Commodities Exchange Ltd., which started providing warehousing and trading services in four of Nigeria’s 36 states in 2013. Integrated Produce City plans to offer daily auctions as well as an industrial park for manufacturers.
Nigeria is Africa’s fourth-largest cocoa producer and the seventh worldwide with a 2015-2016 output of 190,000 metric tons, according to the International Cocoa Organization.
In addition to cocoa, other major exported products during the last quarter of 2016 were sesame seed, frozen shrimps, soy beans, cashew nuts and crude palm kernel, figures from the statistics agency showed.
(A previous version of this story was corrected to remove reference to the first commodities exchange in lead.)