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Economy

Akeredolu-Ale Says ISB Will Improve Nigeria’s FX Earnings

By Aduragbemi Omiyale

The Managing Director of the Lagos Commodities and Futures Exchange (LCFE), Mr Akin Akeredolu-Ale, has described the Investments and Securities Bill (ISB) passed by the House of Representatives last year as a game changer, pointing out that it would help Nigeria improve its foreign exchange (forex) earnings.

Nigeria’s FX earnings from crude oil sales have dwindled in recent times due to low production caused by theft, putting pressure on the Naira in the currency market.

But the LCFE chief believes the new bill would change the narrative, as it would enable the commodities trading ecosystem to thrive, thereby diversifying the nation’s economy.

He stated that Nigeria is a commodities country as a better part of the gross domestic product (GDP) by way of production comes from the commodities ecosystem and urged the Senate to ensure swift concurrence on the Bill.

“We need that concurrence by the Senate as quickly as possible. I am very happy that the NASS has taken it upon themselves, as well as the SEC, to push this bill. That bill is a game changer for the commodities ecosystem and also a game changer for Nigeria as a commodities country.

“For now, a lot of commodities being traded are still in the informal sector, the bill would create structure, and all the leakages from taxation and revenue will be taken care of by this bill.

“The major thing about the commodities ecosystem is the fact that we are looking inwards in Nigeria now.

“A lot of the impact of the policies that the Central Bank of Nigeria (CBN) had done last year by way of supporting the agriculture space is paying off now in the maize, wheat and rice space, among others.

“For us at the LFCE, we have also looked at the part of commodities that has to do with solid minerals, which is the gold space.

“In Nigeria, we have over 58 different solid minerals that are sought for all over the world, and we have not touched platinum or lithium, which is the major component for batteries and electric cars.

“These are the kinds of commodities that, by the time the bill is passed, we would be able to have a proper structure and attract foreign investors.

“What do these foreign investors look out for? The foreign investors look at regulatory framework, legal framework and a proper enabling environment to want to participate in the market,” he commented.

Mr Akeredolu-Ale disclosed that in a bid to deepen the commodities trading ecosystem in Nigeria further, the Securities and Exchange Commission (SEC) had approved 13 products for trading on the LCFE.

He stated that the exchange has the capacity to trade electronic receipts of oil and gas, agriculture, solid minerals, derivatives and currencies, adding that the exchange has also put in place the necessary infrastructure to trade in derivatives as hedging instruments for investors.

“On July 28, 2022, we launched the Gold Coin. The good thing about the Gold coin is that the gold that was used in its preparation was sourced from Nigeria, and a lot of it came from Ilesha. It is being traded, and people have realised that this is a very good hedging instrument; this goes to show the capacity of what we can do in Nigeria if this bill is passed,” he remarked.

“The goal of LCFE is to play a pivotal role in growing the nation’s GDP into double digits. In Africa, the commodities ecosystem is the largest employer of labour. It provides a platform to deploy resources into the fungible assets that have been de-risked. We bring transparency through the operations of commodities exchange through our structures and two-way quote,” he added.

The LCFE chief, therefore, restated the compelling need for the federal government to unlock the potentials of the Nigerian commodity ecosystem through the concurrence of the ISB by the Senate, stating that, at the minimum, it will enhance the competitiveness of commodities exchanges in Nigeria.

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