AFEX: Food commodities market remains major driver of Nigeria’s agric economy

The Nigerian agricultural sector is facing a complex web of challenges and opportunities in the wake of global trends and domestic factors that are shaping commodity prices. Ayodeji Balogun, CEO of AFEX Commodities Exchange, sheds light on the current landscape and the outlook for key crops like maize, soybeans, and rice. Balogun highlights that commodity and food prices in Nigeria are increasingly influenced by global trends, with the pandemic, distribution of vaccines, fiscal and monetary policies, and the African Continental Free Trade Agreement all playing crucial roles. He emphasizes that the export market is a significant driver of commodity prices, with a surge in demand from China and other countries impacting the local supply and demand dynamics. Nigeria is experiencing strong demand for maize due to growth in the protein value chain and the devaluation of the Naira, while exports of key commodities like sesame seeds and palm oil are on the rise. However, challenges on the supply side, such as production losses from COVID-19 and droughts in key states, are creating gaps in the market. Balogun stresses the importance of addressing issues like fertilizer shortages and policy barriers to boost agricultural productivity and meet growing demand. Despite these hurdles, Balogun is optimistic about the potential for investors to access the domestic commodities market in Nigeria through platforms like the AFEX Commodities Exchange. The integration of digital technologies and asset-backed securities has made it easier for institutional and retail investors to participate in the market, offering liquidity and transparency. Looking ahead, the African Continental Free Trade Agreement is expected to revolutionize trade in soft commodities across the continent. Balogun predicts that the agreement will enhance market access, promote price transparency, and spur economic growth in the region. However, he underscores the need for infrastructure development, policy harmonization, and tariff reduction to fully realize the benefits of the trade pact. With strategic investment and cooperation, Balogun believes that Nigeria and other African countries stand to benefit from increased intra-continental trade and economic prosperity.