Multi-faceted mandate will support agricultural commodity markets development and financing
Zimbabwe, Mauritius, UK, 21th March 2018. The Government of Zimbabwe, under the aegises of the Ministry of Foreign Affairs and International Trade (MoFAIT) and Ministry of Lands, Agriculture and Rural Resettlement (MLARR) and FinComEco, the fully integrated Financial & Commodities Ecosystem (FinComEco) providing services, financing, capacity building and enablement solutions from supply to demand, have signed a Memorandum of Understanding (MoU) to jointly develop a range of platforms, projects and initiatives in the agricultural commodity markets sector in Zimbabwe.
This is expected to be extended into a Memorandum of Agreement (MoA) subject to approval under the new Joint Ventures Act which came into force in January 2018. FinComEco with local partners and MLARR will then establish a joint venture company to develop high impact initiatives to facilitate agricultural value chain efficiencies through provision of strategic value-added services including an electronic Warehouse Receipt System (eWRS), Exchanges, Trading Platforms, Commodities and Input Finance and Electronic Banking, training and capacity building including the establishment of a commodities exchange underpinned by Blockchain technology.
The mandate will also deliver marketing information and other value-added services, such as market access and policy change interventions, identifying project opportunities in high growth segments of the agricultural industry working together and with appropriate partners including International Development Agencies and Development Finance Institutions as well as the private sector. There will also be investment in existing and new warehouses with related infrastructure and logistics.
Based on estimates, the value-added by FinComEco to the agricultural sector in Zimbabwe will be in excess of US$1.5Bn over a 5 year period in terms of GDP growth resulting in considerable economic and social impact for the population with the GDP per capita of Zimbabwe estimated to increase by 1.5 times between 2018 to 2022 as a result of this and wider initiatives. This is expected to create 90,000 direct jobs in the agricultural sector. According to the Farmers Unions every job created in the farming sector creates 7 more jobs in other related sectors. The FinComEco ecosystem will, therefore, have additional benefits and spill-on effect on other sectors such as construction and creation of new direct and indirect jobs with the creation of additional indirect jobs across all related sectors estimated at 630,000 over a 5 year period.
The Rt Hon Major-General (Rtd) Dr Sibusiso Moyo, Minister of Foreign Affairs and International Trade said, “This collaboration marks the beginning of Zimbabwe’s participation in international trade, which is the backbone of Zimbabwe’s economy.”
The Rt Hon. Perence Shiri, Minister of Lands, Agriculture and Rural Resettlement, Zimbabwe commented, “This collaboration sets Zimbabwe on track to becoming the bread basket of Africa and beyond with access to international markets.” He added, “The FinComEco initiative will promote a viable sustainable agricultural and horticultural sector, by optimising productivity in addition to ensuring ongoing food security and job creation for our country.”
Hirander Misra, Co-Chairman of FinComEco and CEO of GMEX Group added, “We are delighted to be working with the Government of Zimbabwe to facilitate positive economic and social impact for farming communities and related sectors. The whole FinComEco ecosystem will be based on the set-up of the Zimbabwe Commodities Exchange, optimising agricultural inputs, facilitating access to finance and credit facilities, provision of warehousing and logistic facilities to enable GDP growth and job creation.”
FinComEco is enabled by scalable, centralised, de-centralised & Hybrid technology solutions delivered by its partner GMEX Group including the use of Blockchain technology.
GMEX and FinComEco:
The Realization Group
+44 (0)7974 937 970
Office of the President of the Cabinet (O.P.C.)
+263 (0) 712867335
About the Ministry of Foreign Affairs and International Trade (MoFAIT)
The mission of the Ministry of Foreign Affairs is to promote the political and economic interests, image and influence of the Republic of Zimbabwe in the international community and to protect the interests and safety of Zimbabwean nationals abroad through our Diplomatic and Consular Missions abroad, interface with foreign Diplomatic Missions accredited to Zimbabwe and coordination of Zimbabwe’s responses to regional and international development.
The strategic objectives of the Ministry are to promote and enhance Zimbabwe’s national interests and influence in the international community to protect a positive image of Zimbabwe abroad; to protect and secure the interests and safety of Zimbabwe’s nationals abroad; and to coordinate with other Ministries in the formulation and implementation of Zimbabwe’s foreign policy.
About the Ministry of Lands, Agriculture and Rural Resettlement (MLARR)
Ministry of Lands, Agriculture and Rural Resettlement (MLARR) has the responsibility to promote and sustain a viable agricultural sector and to develop and manage land resources through the provision of appropriate technical, administrative and advisory services in order to optimise, technical, administrative and to contribute to equitable and sustainable social and economic development in Zimbabwe.
FinComEco, the financial and commodities ecosystem is fostering financial inclusion with social responsibility in collaboration with local stake-holders, development organisations, governments and the private sector with the aim of improving food security and economic diversity.
FinComEco has developed a business model, which will, where the ecosystem warrants, be deployed together with financing models designed by its African partners and approved by requisite Central Banks, to solve credit and financing issues that affect small-scale farmers throughout Africa. The linkage of the trading platform to a financing mechanism is a very important part of the FinComEco offering. The initiative looks beyond the typical exchange objectives of reducing costs and increasing transparency as well as focusing on a desperately needed, effective electronic warehouse receipt system. As part of the wider FinComEco model, enabled by scalable technology supported by its partner GMEX Group, FinComEco will work with, local and international partners to facilitate private and development finance funding for the Agri finance initiatives, as appropriate.
The new electronic commodities exchange solution is establishing and reinvigorating local spot exchanges and enabling trade across multiple regions with a focus on the agricultural sector to create a holistic secure financial system.
- Price discovery and transparency
- Electronic warehouse receipts
- Trade finance and micro lending facilitation as a distribution hub
- Risk management and hedging
- Integrated Electronic banking and payments platform
- Standards framework
- Traceability and tracking enablement
- Capacity building and education
- Operational and technology consultancy
- Working with trusted local partners
Operational objectives include:
- Maximising the earnings potential for smallholder farmers
- Supporting smallholder farmers to thrive enabled with best of breed-of-technology and inputs (including seeds, fertilisers and pesticides), coupled with a unique Agri-finance business model to solve credit and financing issues.
- Leveraging as well as enhancing current logistics, warehousing and standards to establish a fully vitalised agricultural ecosystem efficiently linking supply to demand.
FinComEco has proven its concept in Malawi at the Agricultural Commodity Exchange for Africa (ACE) through GMEX Group and is establishing fully regulated market places in other African countries and South-East Asia.
Current shareholders include GMEX Group Limited, Saescada Limited and Houghton Street Capital Limited as well as individuals.
For more information visit www.FinComEco.com
Notes to Editors
Benefits to farmers, farming communities and the wider economy in Zimbabwe:
- The whole FinComEco ecosystem will be based on the set-up of a Commodities Exchange, optimising agricultural inputs, facilitating access to finance and credit facilities, provision of warehousing and logistic facilities.
- Registration of land owners/farmers by using enhanced blockchain technology. This will gradually eliminate frauds and encourage efficiency of Government programmes related to agriculture.
- Full use of technology for land management and yield improvement which farmers can use through mobile applications. Purchase and supply of agricultural inputs such as irrigation, fertilizers, soil testing results and seed quality can be optimised.
- Removal of certain non value adding intermediaries which means higher margins on price of commodities sold.
- Lower cost of finance and credit facilities can be approved quickly through electronic warehouse receipts. This will allow farmers to plan crop plantation/rotation early and effectively which will boost crop yields over the long term.
- Provision of warehousing and logistics facilities will allow farmers to focus on growing crops and enhancing yields instead of worrying about storage, finding clients and wastage.
- Working with Government and partners to build or facilitate construction of warehouses and road-related infrastructures and transportation.
- Expenditures related to irrigation projects and flood control measures will also need to be incurred through help of DFIs and International Agencies
- Adequate credit facility facilitation from local, regional and international banks through use of electronic warehouse receipts. This can start from recognition by regional trade blocs such as SADC, COMESA and recognised and adopted by regional banking groups.
- Improvement of marketing facilities through consolidation into co-operatives/major companies or associations to benefit from economies of scale. Logistics and transport services to be linked between warehouse and co-operatives/associations/companies.
- Over the long-term, consolidated operations can seek vertical integration into processing, packaging and transformation into value-addded products.
- Opening the market to suppliers of inputs from friendly nations in joint ventures between Zimbabwe Government/ private businesses who will recognise the electronic warehouse receipts, provide revolving credits to duly registered farmers. This will ensure good supply of agricultural inputs which will be available at appropriate time and through controlled prices.
- The FinComEco ecosystem will gradually built its own database related to agricultural inputs, financing trends, commodity prices, demand and supply which will be important parameters for future reference. Education related to agriculture will also benefit from this programme.
- On the long-term, the ecosystem will allow proper allocation of labour. Surplus labour can be absorbed in value-added agricultural processing, organic agriculture.
- Land reform programme can be monitored, administration set-up can be streamlined and necessary measures can be taken by the Government.