The Botswana International Financial Services Centre
has been actively engaged in following up various opportunities to
establish a Pan African commodities exchange in Botswana and now it
will facilitate the establishment of a Multi Commodity Exchange (MCX)
initiative here that will house commodity trading infrastructure and
clearing systems.
Commodity Exchanges as
defined by the United Nations (UN) are: "organizational entities which
allow those active in the production, trade, processing and consumption
of physical commodities to reduce transaction costs. They provide
discipline and act as a source of market information, and give those
active in the commodity sector both the tools and the incentives to
improve the way they operate. In this role, they can contribute
substantially to the economic development of a country and the
well-being of its population".
The MCX initiative is in line with the Arusha Declaration and Plan of Action on African Commodities of 2005.
Speaking at the inception of the project Vice President Lieutenant
General Mompati Merafhe said the MCX seeks to redress the problems that
challenge African commodities.
MCX
Africa project would establish and operationalize a Pan African
commodity exchange to trade agricultural commodities, oil and metals
across Africa on a hub and spoke model, with the hub located in
Botswana under the Botswana IFSC, he said.
The
MCX Africa project would trade commodities across Africa and integrate
the efforts of numerous African countries. These trading activities
would show that Pan African initiatives can be exploited for the
benefit of the continent as a whole, he said.
Botswana
would take the opportunity to join other international commodity
exchanges around the world that are operated by Financial Technologies
of India Limited, such as the Multi Commodities Exchange of India or
MCX India, Dubai Gold and Commodity Exchange ("DGCX") and the Global
Board of Trade in Mauritius ("GBOT").
Merafhe
said the project would boost the development of Botswana's financial
services sector and yield other significant benefits. “It is our
expectation that the MCX Africa commodity exchange project will enhance
the profile of the Botswana financial services industry,” he said.
Considerable
benefits that are expected for Botswana include employment creation,
tax revenues, infrastructure development, transfer of technology and
expertise, and economic empowerment of Batswana.
He
was confident of the competence and the ability of the Financial
Technologies India Limited (FTIL) and the MCX Group to diligently
execute what is otherwise a highly complex and sophisticated
undertaking.
Merafhe said other commitments
contained in the Arusha Declaration included the "establishment of a
forum to discuss the implementation of the commodity exchange
initiatives, and in particular, to enable private sector parties to
discuss such initiatives, their requirements and potential obstacles".
He
said the participation of the IFSC in the MCX Africa initiative would
grow and would strengthen Botswana's status as a preferred Pan African
financial centre.
“It is encouraging to learn that MCX Africa is
being promoted by a leading Financial and Technology Company based in
India,” he said.
The
establishment of MCX Africa in Botswana was consistent with Botswana’s
economic diversification strategy. It deepens the sophistication of our
capital markets, will create employment and promote the transfer of new
skill and technology, Merafhe said.
He noted that favourable conditions in Botswana influenced MCX Africa to locate MCX in Botswana.
The Botswana Gazette
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