Ethiopia: Africa’s First Commodity Exchange Transformed Economy

Dr. Eleni Gabre-Madhin, the founder and outgoing CEO of the Ethiopia Commodity Exchange (ECX), established a reliable interface for buyers and sellers to meet. (Google Images)

In the Guardian, Lauren Everitt of All Africa.com interviews Eleni Gabre-Madhin on how a market has empowered Ethiopian farmers by focusing on distribution as well as production. She writes:

While government leaders, NGOs and corporations devise strategies to churn out more food for future generations, Eleni Gabre-Madhin is taking a different approach. Concerned by a 2002 famine in her home country of Ethiopia that followed bumper crops in 2000 and 2001, the Stanford-educated economist decided it was time to go beyond food production and take a hard look at distribution.

The result? Africa‘s first commodity exchange. As the founder and outgoing CEO of the Ethiopia Commodity Exchange (ECX), Gabre-Madhin established a reliable interface for buyers and sellers to meet – an idea that has inspired other African countries to follow suit. Gabre-Madhin won the Yara award at the African Green Revolution Forum in Arusha, Tanzania, for her role in transforming Ethiopia’s commodity market.

What prompted your decision to found Africa’s first commodity exchange in Ethiopia? I had been doing research on grain markets and other agriculture markets in Africa for many years and, as it happened, I did my PhD on grain markets in Ethiopia. One of the things I kept seeing over and over, which I’d seen in other parts of Africa, was just how difficult it was for buyers to find sellers and sellers to find buyers, and how difficult it was to enforce the contract.

You’d see that a seller, such as a farmer, for example, who sold grain or coffee visually to check if it was really the quality they’d been told it was. They would have to reweigh it and rebag it to see if it was the actual quantity and quality that they were contracting.

So these are all the problems in the supply chain that make us poor and make us food insecure. If people can’t get grain where it’s produced really efficiently to where it’s needed, then you have markets that are segmented. You have pockets of surplus where prices collapse and places in other parts of the county where prices shoot up because there’s a deficit and there’s no grain coming in.

That’s exactly what happened in 1984 in the big famine that claimed a million lives in Ethiopia. There was obviously a shortage in the north and yet Ethiopia had to go to the world and beg for food aid, but there was a grain surplus in the fertile parts of western Ethiopia.

When I found out about this, I said: “It can’t just be about producing more – sure, producing more is important but we’ve got to figure out how to distribute it. We’ve got to figure out how to make an efficient market work for everybody – for the farmers, for the buyers, because otherwise we’re always going to be in this cycle.”

Read the interview in its entirety at The Guardian.

Like The Burton Wire on Facebook. Follow us on Twitter @TheBurtonWire.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.