AFEX Commodities Exchange Limited (AFEX), Nigeria’s leading private commodities exchange company, has announced the first warehouse receipt-backed commercial paper in Africa, with tech-enabled operations and a 24-hour fast cash turnaround for borrowers. With over $50 million raised for agri-SMEs, this bridges the funding gap between lenders and borrowers in the Nigerian agricultural sector with a commodity-backed instrument – for the first time. The AFEX financing deal will help eradicate the high cost of procurement incurred by processors by deploying a discounted value of a warehouse receipt distributed among five leading players in the food and beverage, trading poultry, and animal feed segments in Nigeria. According to AFEX, the receiving companies are top 10 players in their respective segments. Now, they have been enabled access to a tool for managing price volatility, creating 30percent direct savings on prices. “With our vision to reach a cumulative total of over $5 billion in investment in the agricultural sector over the next five years, this financing deal is right on track to achieve this goal,” said Ayodeji Balogun, chief executive officer of AFEX Commodities Exchange. Why Nigeria needs urgent, collaborative action to resolve maize crisis “As we move towards building a derivatives market in Africa, we want to be able to reduce exposure to price risk for stakeholders, by enabling them to hedge their positions and trade in commodity derivatives,” Balogun said. The warehouse receipts, which can then be transferred from commodities to a financial asset and listed under the borrower’s portfolio on the AFEX trading platform, will create a sustainable funding structure and address underfunding in the country’s agricultural sector. With the warehouse receipt system linked to financiers, the system allows financiers value and marks the commodities’ price to market on a real-time basis.