1. Project CENTRAL COMMODITY EXCHANGE
Themes FINANCIAL MARKETS, REGULATORY INSTITUTIONS, NATURAL RESOURCES
UN-SDGs
Main
Characteristics
Client: MALI GOVERNMENT MINISTRIES - DEPARTMENT OF ECONOMY & FINANCE, DEPARTMENT OF MINES, DEPARTMENT OF AGRICULTURE, DEPARTMENT OF COMMERCE & INDUSTRY
Project: ●The MALI CENTRAL COMMODITY EXCHANGE
Performance: ●Research and business engineering ●Coordination of the international RFP ●International road-show ●Search and selection of the technical partner ●Search and selection of the
financial partner ●Coordination of the feasibility study ●Signature of PPP Agreement with government
Macro Socio-
Economical
& Historical
Context
There are large opportunities for agricultural and mineral commodities trade in Africa,
and most of these opportunities lie in national and regional trade. The value of the
market for Africa’s traditional export commodities, such as cocoa, coffee and cotton,
is projected to increase from US$ 8 billion in 2000 to US$10.5 billion in 2030 (in
constant dollars). The markets for high-value exports (e.g., flowers, fruits, vegetables)
would increase from US$3 billion to US$10 billion. However, the African urban
market for food is expected to grow from US$50 to 150 billion. The total production
of agricultural, fuel and mineral commodities in Africa is huge, about three times larger
than that of India, which supports the world’s second largest commodity exchange as
well as a number of smaller exchanges.
The commodities market context in West Africa and Mali :
+ Inaccessibility of resources in the producing countries and regions, shortages and consequently famine
+ Difficulty for buyers to find sellers and sellers to find buyers, and difficulty to enforce the contract
+ Un-regulated, illegal and hazardous production
+ Loss of state earnings
+ Quality and traceability uncertainty
+ Price fluctuations, pockets of surplus where prices collapse and places where prices shoot up because of
deficit
+ All sorts of cases of transaction contract default, with a large variety of unsecured transaction process and
pricings principles
Stakeholders
Ecosystem
/ Frameworks
- Mali Government Ministries : Department Of Economy & Finance, Department Of
Mines, Department Of Agriculture, Department Of Commerce & Industry
- The U.N. Food and Agriculture Organisation,
- International Federation of Organic Agriculture Movements (IFOAM)
- The Roundtable on Sustainable Palm Oil,
- The New Partnership for Africa’s Development,
- The World Bank
- U.N Development Programme, the U.N Global Compact
- Organisation for the Harmonization of Business Law in Africa (OHADA)
- Extractive Industries Transparency Initiative (EITI)
- National Union of Mining Operators (UNOMIN)
- Union of Collectors & Mineral Counters (ACCOR)
- Bureau Veritas
- S.G.S.
The Vision
- Provide an inclusive development solution guiding and enabling growth for the Mali and the West African commodity sectors, with a specific focus on the organisation and financing of production and
trade :
+ Make sector development more inclusive, grow the regional commodity economies and trades
+ Promote and enable financing for agriculture and mining: provide a new source of commodity finance, linking miners/farmers, mineral/agro-processors and traders directly to the capital market,
and reduce investment risk
+ Promote more competitively and efficiency at the national and regional level, as well as international accessibility and marketing
+ Enable the deployment of the value chains to internalize the associated valuable revenue opportunities
+ Link rural communities to the fast growing cities
Our Mission
- Coordinate a systemic effort to elaborate and streamline the Natural Resources and Commodity sectors towards an inclusive development which supports the vision objectives
- Create a regulatory institution and operating platform which will structure and enable the commodities market development and upscaling: "The MALI CENTRAL COMMODITY EXCHANGE"
OBJECTIVES PERFORMANCE - DELIVERABLES - MEASUREMENT CRITERIA
Systematic Review & Meta-Analysis of the
Agriculture, Mining, and Commercial Trading sectors
in Mali, West Africa, Africa and Emerging Markets
- Census of all the known and most effective initiatives to promote transactions and trade
- Engage regional stakeholders and International Bodies of Knowledge
- Select & target efforts to most strategic and impactful "bottlenecks" : The under-developed Transaction Capacities

2. Mapping of the stakeholders environments and
engage them to align Interests and Risks
- Define agricultural and mineral sector potentials & identify limiting factors:
+ Infrastructure, Legal & regulatory Institutions, Capacity & Technical Expertise, Corruption, Financing.
- Definition of and Systemic Design of main stakeholders Interests and Risks:
+ Government interest + Clients interest + Brokers interest +etc.
Elaborate and structure the most appropriate and
inclusive solution as a National Priority Project :
- An organized and transparent marketplace where
buyers and sellers come together to trade
commodity related contracts following rules set by
the exchange
- An organized market place where trade is centralized, secured through one mechanism and a third party
- Identify & detail the Transaction Capacities which need to be secured:
1. Standardize products characteristics & grade (quality, quantity...),
2. Communicate to market and find appropriate counterparty (buyer, seller),
3. Fix pricing over time and distance,
4. Guarantee transaction protocol and delivery
- Detailed conception of the "MALI CENTRAL
COMMODITY EXCHANGE" role, scope and functions
- Production of the MALI CENTRAL EXCHANGE
Business Plan and Detailed Pre-Feasibility Study
- Main Characteristics and Functions:
+ Provide a trading platform: a physical trading floor and an electronic trading system
+ Provide an intricate set of trading rules, including standardized contracts in terms of quality, quantity, delivery location, delivery time, etc.
+ Provide price transparency (everyone has access to a neutral reference price), price discovery (demand and supply developments are readily
reflected in price levels), and reduced transaction costs (easy-to-find buyers & supply through the centralized market place).
+ Be a guarantor with risk transfer mechanisms to secure operations:
●Guarantee logistics, by exchanging equivalent quality goods from one warehouse to another ●Provide security on the quality and the
quantity of the commodity traded, by setting grades and standards and licensing those who are permitted to issue grading certificates
●Use warehouse receipts, which guarantee the physical presence of the goods
- Instruments, their Uses, and Regulatory Implications:
+ Standardized spot contracts, with delivery through warehouse receipts.
+ Standardized forward contracts. The exchange permits buyers and sellers to make commitments for future delivery. The exchange actively
manages the risk of counterparty default and secure insurance and/or guarantee fund.
+ Warehouse receipt repos. The exchange enables those with stocks of physical commodities to use them as collateral for short-term loans.
+ And eventually: ● Commodity futures and option contracts ●Risk management tools ●Separate regulator for warehouses desirable.
Determine the Economic, Social and Environmental
Impact Profile of the Project
- Further benefits:
+ Create compliance incentives. Define better quality standards, create incentives for market participants to produce commodities that meet
exchange specifications + Make the commodity sector bankable. The reference prices allow banks to better value commodities given as
collateral and ensures its warehousing, and directly improve commodity finance with the warehouse receipt mechanism by trading commodity
repo contracts + Broadening access to markets + Empowering farmers to make better cropping and selling decisions + Reducing information
asymmetries that have previously advantaged more powerful market actors + Upgrading storage and product longevity + Grading and
technology infrastructure and expertise creating jobs + Expanding access to cheaper sources of finance
+ Act as catalyst for the growth of the industries & value chains related to Trade: ●transport and other logistics services ●information services
●financial services needed in regional trade (banking, insurance) ●develop a network of warehouses into which sellers can make delivery
Acquire official public, institutional and private
endorsements, and define the Public-Private
Partnership Agreement
- Secure early support from leading commercial interests & market makers, for input orders and for continuous quotation, bidding and asking of
prices on the exchange,
- Get commitment from the government public procurement agencies, i.e.: the Department of Economy & Finance / Defence / Agriculture, to
execute a significant share of its business through the exchange.
- Give financial incentives to early participants in the contract i.e.: a percentage of the exchange’s trading fee income over a period of 1-2 years.
Mgmt. Systems
& Tools
/ Regulatory
Frameworks
/ Evaluation
Method /
Reporting
▪ Set up of National Norms & Standards compliant
to International Sustainable Development
Frameworks:
+ Fairtrade Principles
+ CERES Principles,Occupational
+ U.N Sustainable Stock Exchange (SSE)
+ Finance Alliance for Sustainable Trade
▪ Evaluation systems and tools developed with the stakeholders
▪ Dedicated Progress Reports produced for the various Stakeholders + Global Reporting Initiative Framework
▪ Reconcile management systems with international regulatory institutions for Governance and Measurement of progressive & continuous
improvement, i.e.:
+ Quality Management ISO9000
+ Health & Safety ISO45001,
+ Environmental Management ISO14000