Ethiopian Commodity Exchange (ECX) said it was set to commence a new service which allowed traders to use warehouse receipts which would be given out by the organization as collateral when they needed short term loans from the banks.
ECX plans to start the new service this fiscal year. The warehouse receipt which will be issued by ECX will contain the serial number, name and location of the warehouse, license number, date of receipt and duration of storage, name of commodity, quantity, quality, grading, and standardization.
The commodity’s nature, its market price, and the minimum support price will determine the loan amount. The depositor endorses the warehouse receipt in favor of the bank and takes a loan against the commodity. Once the bank receives the loan from the buyer, the commodity can be released.
Meanwhile, a partnership agreement is signed between Abay Bank and ECX. The agreement which was signed by ECX’s CEO Wondimagegnehu Negera and the Bank’s President Yehuala Gessesse makes Abay Bank the 15th financial institution to partner with ECX. Currently, there are more than 5,500 bank accounts at the 14 banks which can carry out business with the ECX.
ECX was found ten years ago and a total transaction volume of Birr 182.8 billion was recorded by the authority since its establishment. In the 2017/18 fiscal year, ECX transacted Birr 31 billion worth of commodities. The authority also opened new offices in Bule Hora, in the west, and Central Guji region of Oromia Regional State.
Source: Capital and Addis Fortune