Poor famers have difficulty accessing markets and their produce sometimes goes to waste. A commodity exchange has the potential to drastically improve the lives of rural farmers. The Center for Technology and Economic Development (CTED), in conjunction with its partner organizations, the Development Research Institute (DRI) and Africa House, is conducting an extensive research study to evaluate the impact of Commodity Exchanges throughout Africa, and specifically focusing on the Ethiopian Commodity Exchange (ECX), to assess its institutional design and technology systems, and to measure the performance of the market. CTED is also developing mobile phone applications to increase the accessibility of Commodity Exchanges to rural farmers.
Established in 2008, the Ethiopian Commodity Exchange (ECX) was conceived as a set of mechanisms and rules designed to address issues that limit the development of the agricultural sector, such as high transaction costs, information asymmetries, coordination failures, and lack of contract enforcement. The research team will study the performance of the exchange vis-à-vis its initial objectives by generating theoretical and empirical research outputs. The analysis of the Ethiopian experience will provide tools for other Sub-Saharan African countries to consider the development of commodity exchanges.
Mr. Bemnet Aschenaki, Chief Strategy Officer of ECX, and Prof. Yaw Nyarko, Director of Africa House and CTED and Co-Director of DRI, presented the objectives and scope of the partnership in a press conference at ECX offices in Addis Ababa. Mr. Aschenaki expressed the need of an independent evaluation of the exchange in order to understand its current value, identify the areas of improvement, and shape the future of the exchange. Prof. Nyarko remarked that the transfer of knowledge and local capacity building are key components of the agreement.
The research topics are organized into three broad categories:
- Impact on the welfare of different stakeholders, in particular small-scale producers
- Intermediation and institutional design
- Technology and diffusion of information