The Lagos State Government has signed an agreement with the Lagos Commodities and Future Exchange (LCFE) and key capital market operators to provide sustainable finance to the commodities ecosystem by generating tradable financial instruments.
This came as the state government disclosed that is targeting N100 billion in liquidity financing annually for Imota Rice Mill.
Speaking at a ceremony, held at Alausa, Ikeja, yesterday, the Special Adviser to the Governor on Agriculture and Rice Mill Initiative, Dr. Oluwarotimi Fashola, said the partnership was a historic development that would ensure liquidity to support the continuous supply of paddy for the Rice Mill in Imota and availability of finished rice in the market.
Fashola noted that the significant stride makes Lagos State the first sub-national to move from infrastructure finance through the capital market to commodities finance, towards becoming a major hub for commodities trading for agricultural products in Africa.
He commended the state Governor, Babajide Sanwo-Olu for the vision, strong support, and leadership role that brought about the consummation of the partnership, just as he applauded all stakeholders that collaborated with the government to bring about the successful take-off of the deal.
According to Fashola, “We are delighted with this partnership and with this development, Lagos State has become the first sub-national that will have such an engagement with a commodities exchange. A lot has been said about the consumption of rice in Lagos and I am sure everyone would have eaten rice at least once this week.
“Our per capita consumption of rice is the highest in Nigeria and it is one of the highest in Africa. It is about 40 kilogram per person per year and that is almost 50kg of rice per year and if that is multiplied by our population of over 22 million, the demand for rice in Lagos will be better situated.”
Describing the Eko Rice as the best in Nigeria at the moment, Fashola said the Lagos rice mill in Imota has come to challenge the status quo about the quality of rice, and that there was a need to ensure the ceaseless flow of raw material to make it function optimally.
“Imota Mill will be requiring over 200,000 tonnes of paddy annually. It is not cheap. In Nigeria as of today, that is going into almost N100 billion, and N100 billion of taxpayers’ money being taken from the government will not be the easiest to do in any financial year but with the partnership with Commodities Exchange, we can maintain the flow of paddy to the mill, the mill continues to run, we have a comparative advantage of having a good price and at the same time, the finished rice becomes available in the market,” he stated.
The Managing Director of Lagos Commodities and Future Exchange (LCFE), Akinsola Akeredolu-Ale commended Sanwo-Olu for not only seeing the need to bridge the rice needs of the nation but understanding the critical role of the capital market.
Akeredolu-Ale said, “At the Commodities Exchange, we understand the need to deepen the capital market and the commodities ecosystem concurrently.
“The Capital Market plays a critical role in providing sustainable finance to the ecosystem through the generation of tradeable financial instruments.
“Our duly licensed capital market professionals are already working on various financial instruments to deepen the Rice Value Chain.
“Investors are eager to start investing in the Rice Mill and other rice-backed commodity instruments. Exchange aggregators have already started supplying paddy to the mill and more are en route to the mill as we speak.”
He added that the signing ceremony represents a great stepping stone to building stakeholders’ confidence for a great reception of the financial instruments by the capital market, assuring that the exchange would drive the support of the market towards the ecosystem.
Akeredolu-Ale, added that the liquidity would be raised in batches, with N5 billion targeted for the first batch, while N30 billion is expected to be raised within six months and thereafter the N100 billion annual target.