How agro processors can access finance with Warehouse Receipts System-NCX

The Managing Director of the Nigeria Commodity Exchange (NCX), Zaheera Baba-Ari, has advocated the use of Warehouse Receipt System (WRs) in the trading of agricultural produce. Baba-Ari spoke in Lagos recently at the Nigeria Manufacturing and Equipment Expo, which was co-located with the 6th Nigerian Raw Materials Expo. According to her, Warehouse Receipt System is an efficient tool used by the agro processing companies in sourcing quality assured raw materials for sustainable food production, food security, transparency in marketing of agro commodities, appropriate credit and uniform grades and standards. A warehouse receipt is a document of title to specific goods of a certain quality and quantity stored in a licensed and named warehouse which may be negotiable or non-negotiable and issued by a Warehouse Operator or Collateral Manager, she added.

The MD added that warehouse receipts can either be negotiable or non-negotiable, adding that negotiable WRs are tradable on commodity exchanges, while non-negotiable WRs are not tradable but can be financed. On the benefit of WRs, the MD said the system allows the holder of the receipt to obtain financing at up to 70% of the value of the commodity from banks. ‘’Agro processing companies in the industrial sector can hold WR either for production, financing or trading. For example, they can sell their excess inventories on an Exchange if they no longer have need for them,’’ she said. She said the legal system must support warehouse receipts as secured collateral, adding that the NCX began development of WRS in 2009 by drafting a WHRF bill. ‘’Essence of the bill is to enable depositors store agricultural or other commodities in commercial warehouses and use receipt issued by warehouse as collateral to obtain credit from finance institutions,’’ she said.


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