AFEX, the largest commodities player in Africa, has introduced Africa Exchange, an online commodity trading platform. The platform comes after AFEX’s initial attempt at trading digital commodities with the 2020 launch of ComX. By facilitating meetings and interactions between participants in the physical and financial commodities markets, this new trading platform significantly alters the commodities landscape in Africa. A thorough and knowledgeable trading experience is provided by the platform, which has data and information that is easily accessible and essential for making decisions.
Africa Exchange ensures that customers can engage in a variety of trade or investment options by offering a structured marketplace that is properly regulated by Nigeria’s Securities and Exchange Commission (SEC). ComX, which has assisted over 80,000 investors in Nigeria and enabled deals worth over USD 200 million since its start in 2020, will be replaced by Africa Exchange. With different investment opportunities to enhance their current portfolios, the shift further supports AFEX’s aim of enabling wealth creation for a new generation of Africans.
AFEX also seeks to improve intra-African trade by bolstering commodity trading within the continent and assisting the African Continental Free Trade Agreement (AFCFTA) in its objective of enhancing regional trade integration to advance food security and economic growth throughout the continent.
Currently, trade between African nations accounts for about 14.4% of Africa’s exports. However, the United Nations Conference on Trade and Development (UNCTAD) estimates that the AfCFTA could boost intra-African trade by roughly 33% and lower the continent’s trade deficit by 51%. A major step in realizing the AfCFTA is the creation of Africa Exchange, which aligns with UN Sustainable Development Goals (SDGs) 1, 2, 5, 8, and 12. Fair market prices are supported by the platform, which helps farmers make more money and produce more food. In addition, it helps investors diversify their holdings and contribute to the funding of the food chain.
“As a team, we are excited and proud to launch Africa Exchange as another step in building the digital infrastructure to facilitate trade across Africa,” stated Akinyinka Akintunde, CEO and President of AFEX Nigeria, in response to the launch. Our intention with this launch is to stimulate the African commodities market and enable more investors to join with access to all the necessary information.
“In 2021, commodities were the third highest performing asset class, averaging about 37.1% in returns, while stocks averaged about 36.9%,” he continues. “Commodities have been high-performing assets in recent years.” Commodity brokers and other institutional participants have made their mark and expanded trading opportunities, contributing to the commodities market’s sophistication throughout time. We are adding additional participants and investors to the African commodities ecosystem via Africa Exchange. Users of the site have the option to trade physical commodities directly or invest in financial securities backed by commodities.
In addition to launching the platform, AFEX is bringing back its ground-breaking Fair Trade ETC (FETC) offering. In order to give investors market exposure while optimizing the underlying commodities’ risk-return balance, the FETC is a commodity bundle in a single contract. The product has a 270-day maturity period and has historically generated substantial returns; in 2022, both tranches will return 31% and 20%, respectively. On December 1st, the FETC is scheduled to launch on the Africa Exchange platform at a unit price of just N1000. Following a 120-day hold, this will be the first time in the product’s history that it will be tradeable throughout the tenor period.
“We have been focused on improving our core infrastructure and delivering a better digital interface for commodities trading and investment on the continent for the last eight months,” stated Funto Olasemo, Vice President, Financial Markets at AFEX. The latest iteration of our FETC product is an excellent illustration of how we have continued to drive product innovation.
Since we launched the FETC in 2020, the product has been incredibly popular. With the addition of a tradeable component in this tranche, investors will have even more flexibility as they amass wealth. Our team is thrilled to be helping a new generation of Africans build wealth by offering them diversified investment options to diversify and enhance their portfolios.
AFEX is dedicated to enhancing trade inside Africa. Since entering Kenya and Uganda in 2021 and 2022, the company has been optimistic about achieving this target through the implementation of its strategic Pan-African expansion plan. Within the following few years, AFEX is expected to spread to six more African nations in an effort to facilitate effective commodity trade around the continent and further the goals of the AFCFTA, which aims to increase regional economic integration.