Mmegi/The Reporter (Gaborone)
Wanetsha Mosinyi
17 June 2009
Pan-African commodity spot and derivatives exchange, Bourse Africa, says because Gaborone will be its financial and technology hub, it will have a direct benefit from US$320 billion worth of commodities traded in Africa annually.
Speaking at the Botswana Resource Sector Conference at the GICC last week, Bourse Africa's Head of Strategy Adam Gross said they trade about US$4 billion to US$5 billion worth of commodities per day in India, which is five times smaller than Africa's commodity base.
"Africa is performing below its potential, and we are here to change that," Gross said.
The exchange will have a pan-African presence through a hub and spoke model that will connect the continent's major countries from Gaborone. "We do not only want to see Africa on the world commodities exchange map, we want it to define the map," said Gross.
He said Botswana also stands to benefit from an ambitious 1 million jobs that Bourse Africa plans to create in the next five years. The exchange has roped in former President Festus Mogae as the Chairman of its advisory board.
The Exchange will offer multi-asset class trading in commodities, currencies and bonds under the regulatory framework of the Non-Bank Financial Institutions Regulatory Authority (NBFIRA).
Gross said they have plans to introduce other commodities such as diamonds in the near future, although a lot will depend on demand. The bourse, which was accredited to the Botswana International Financial Services Centre (IFSC) last year, will be officially launched in the fourth quarter of this year.
Gross said the delay in launching the highly anticipated commodities exchange was due to the sophisticated infrastructure and other technical requirements.
"There is a lot to be done in the current capital market regulatory system," he said, adding that the company has enlisted a consultant, Dr Shan Nair, to come up with a regulatory framework that will look at factors like risk.
Bourse Africa will serve financial and commodity market participants and investors, both African and international, by providing opportunities for physical delivery and procurement, as well as hedging and investment.
"The exchange will catalyse performance in African commodity and financial markets through enhancing price discovery, market transparency, risk management, cross-border economic integration, finance and investment on the continent," Gross said.
The initial investment in Botswana will be $100 million. The exchange will have subsidiary markets in major commodity producing countries in Africa with intentions to expand to over 50 countries.
Financial Technologies of India is the principal promoter of Bourse Africa. It operates the Multi Commodities Exchanges of India (MCX India), Dubai Gold and Commodity Exchange (DGCX) and Global Board of Trade in Mauritius (GBOT).
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