16/08/2011 (Kenya Broadcasting Corporation) - African countries are set to gain from an interconnected commodity exchange.

According to Dr Chris Muyunda the Director of Development at the African Commodity and Futures Exchange the African continent, particularly countries in the Eastern and Southern Africa region, could gain a lot from interconnecting their commodity exchanges.

Dr Muyunda says a study published by the African Union in 1991 recommended a continent-wide commodity exchange, the African Commodity and Futures Exchange (ACFEX).

In a statement aimed to spearhead the various prominent commodity experts in Africa and in the diaspora Dr. Muyunda, said ACFEX is the first true Africa-wide commodity Exchange and is a derivative market offering Futures and Options or Forwards as well as Electronic Warehouse Receipts (EWRs).

Dr. Muyunda who spoke at the Regional Agricultural Trade and Productivity program at a Nairobi Hotel, said, over the next few months ACFEX will be making significant contributions to facilitating smooth flow of commodities on the continent and reduce food insecurity in areas such as the Horn of Africa.

"Through ACFEX Options, commodity buyers and sellers throughout the continent will have the right to buy or sell commodities at specific prices and will be able to choose whether to exercise that right or not," said Dr. Muyunda who spoke to stakeholders of the 9 nation Nile Basin.

He added, "Using Futures, commodities such as maize will be delivered to various locations on the continent at an agreed future price," he said.

Muyunda said electronic Warehouse Receipts will allow farmers to approach banks and use the Electronic Warehouse Receipts - EWR as security to obtain short term loans enabling producers to close out the EWR contract at a higher price and pay off short loans.

Muyunda urged clearing firms, trading firms, financial institutions and producer organisations to work with ACFEX to increase agricultural incomes in Africa and eliminate the specter of surpluses in one part of the continent and chronic shortages of food commodities in other parts of the continent.

"The ACFEX electronic trading platform developed by experts in North Carolina, USA, allows trade in agricultural futures, metal futures, energy futures, currency futures, single stock futures and equity index futures," he said.

Currently, 15 agricultural products including; cotton, cashew nuts, wheat, coffee, cocoa, rubber, cattle, cow milk, rice, yam, wheat, maize, sorghum, palm oil, groundnuts and cassava can be traded on ACFEX.