Fifty West African buyers and sellers (including nearly 30 women) from Mali, Niger, Burkina Faso and Guinea gathered in Bamako, Mali, for the fifth cereals exchange organized by the Trade Hub in collaboration with the NGO Afrique Verte and the West African Grain Network (WAGN). The March 8-10 event offered a platform for producers and traders to negotiate costs, volumes, quality, and transportation of their products. Ultimately, they signed 60 “intentions to transact”, pre-contract documents signaling their intention to purchase grain from a particular organization, covering a proposed 27,247 metric tons of agricultural products, primarily cereals.
Previous exchanges in Senegal, Burkina Faso and Abidjan have so far generated around $7 million in trade of cereals and agricultural products.
“Now we are seeing people sign contracts, facilitate the financing of their businesses and make connections with their bank,” said Mr. Kokou Zotoglo, the Hub’s cereals expert. “We have even been able to start conversations with regional organizations about next steps for the cereals exchanges. Progress will take time, but the work is advancing.”
Professionalizing the cereals industry
Since 2014, the Trade Hub has been working to professionalize the West African cereals value chain, traditionally dominated by informal trade and characterized by face-to-face interactions. Through Afrique Verte and WAGN, the Trade Hub promotes use of contracts and the benefits of accounting to cereals traders. The goal is to help cereals traders grow their businesses by expanding their networks and using contracts to extend their companies’ reach beyond personal relationships. At these exchanges, the Trade Hub also emphasizes the importance of good accounting practices and gathering data, which can inform business plans to be used when applying for a loan from a financial institution.
This type of support is essential, noted Mr. Philippe de Kassan, a director at Afrique Verte: “Without bank loans, the agribusinesses we support can grow – but there is a limit. The Trade Hub’s support in the areas of data gathering and keeping accurate accounts opens up new opportunities to grow.”
Local ownership rising, technical advances beckon
The Mali cereals exchange was also the first at which partners shared costs. Participants covered their lodging, and Afrique Verte provided staff free of charge to help organize the exchange’s logistical details – both before the event and on-site. Two Afrique Verte directors from Mali and Burkina Faso attended at their own expense. These small steps represent a path towards sustainability.
Another step is partnering with regional organizations that can take on financial responsibility and move the cereals exchange model to a virtual one, modeled on U.S. commodities exchanges. Mr. Felicien Djossou—a coordinator with the West African governmental body, the L’Union économique et monétaire ouest-africaine or UEMOA—presented the vision of such an exchange.
“This doesn’t exist here today but the building blocks are in place,” he said. “Contracts, which are becoming the norm through the Trade Hub’s work, are absolutely fundamental, and are the foundation of a virtual exchange that can serve cereals traders across Africa.”
In coming months, Afrique Verte and WAGN will follow up with the different companies to complete the transactions initiated through the contracts signed in Bamako.
“Changing behavior in West Africa takes time,” Mr. Zotoglo said. “The traders we are working with saw their parents doing things in the same way. We have … shown [the cereals traders] the benefits of doing something different.”