Wanetsha Mosinyi
6 November 2009
The highly anticipated pan-African commodity and derivatives exchange, Bourse Africa, is now expected to be fully operational in the first quarter of 2010 after some delays due to regulatory issues.
The CEO of the Botswana International Financial Services Centre (IFSC) Alan Boshwaen says the Non-Bank Financial Institutions Regulatory Authority (NBFIRA) needed to be operational before the exchange could start.
The exchange was initially expected to be operational in the fourth quarter of 2009.
However, Boshwaen says Bourse Africa has already set up a liaison office at Fairgrounds Office Park and has started recruiting staff, which has seen significant progress so far.The exchange is expected to employ about 75 highly skilled professionals when it starts.
Boshwaen says Bourse Africa was accredited by the Botswana IFSC in October last year and has since secured support from the government and been assigned priority status because of its potential developmental impact on both the country and Africa.
Bourse Africa officials recently said because Gaborone would be its financial and technology hub, it would have a direct benefit from US$320 billion worth of commodities traded on the continent annually.
Bourse Africa's Head of Strategy, Adam Gross, said at the Botswana Resource Sector Conference that they trade about four to five billion commodities per day in India while Africa's commodity base was nearly five times larger than that.
"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 all the major countries in Africa from Gaborone."We do not only want to see Africa in the world commodities exchange map, we want it to define the map," said Gross.
The exchange will offer multi-asset class trading in commodities, currencies, bonds and diamonds. Another reason for the delay was the sophisticated infrastructure and other technical requirements.
"There is a lot to be done in the current capital market regulatory system," Gross added.Bourse Africa has enlisted a consultant, Dr Shan Nair, to cobble the necessary regulation for factors like risk.Gross said Bourse Africa would 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 initial investment in the Botswana project will be $100 million and 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 and it operates the Multi Commodities Exchanges of India (MCX India), Dubai Gold and Commodity Exchange (DGCX) and the Global Board of Trade in Mauritius (GBOT).
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