Delayed is not denied and that is certainly the case for the launch of the Zimbabwe mercantile Exchange (ZMX). The exchange that is a joint venture between many parties brings a centralised marketing system for agricultural commodities to Zimbabwe; something the market was definitely in need of. Set to initially be launched on the 1st of March 2021 it finally launched on Wednesday 18th of August and it seems like the wait was worth it. It launched with a competent and smooth app to help truly decentralise the process.
The ZMX is a commodities trading platform or exchange. It was set up through a partnership that involves TSL Limited (warehousing), Financial Securities Exchange FINSEC (systems) and CBZ as a depository. The government of Zimbabwe is also involved in the project. The idea is simple, to improve the marketing of agricultural produce, give farmers better market access, give buyers a standardised system and prevent post-harvest losses. This will be achieved through a warehousing and receipting system which we need to look at in detail in their own right.
The warehousing system is the backbone of the mercantile exchange. In this system warehouses that receive and store, commodities have been set up and farmers or holders of produce can go and deposit their produce there. This is the first step in simplifying the process for farmers. Having warehouses closer to them in a decentralised system makes the task easier for farmers. This is just the starting point as we move on to the receipting stage and its importance.
Once a farmer delivers produce to a warehouse we expect that it goes through a process of grading before they are receipted. This can be done digitally thanks to the aforementioned app. The receipt is in essence an IOU that the farmer uses as proof of having the commodity held in the system.
And of course, comes the important part, trade. So once the commodity is graded, warehoused and receipted the depositor can choose what they will do with their receipt. Sell to someone else? Use as collateral for a bank loan? Wait to sell in a better market or to a higher bidder? The options are wide. The receipts are transferrable so when the depositor sells the receipt the buyer can pick up the commodity from the warehouse.
As things stand the system is ready for the processing of 16 commodities namely Barley, roundnuts, cowpeas, wheat, tea, sunflower seeds, soya beans, rice, rapoko, pecan nuts, oats, Macadamia Nuts, sugar beans, sorghum (white and red) and mhunga. Maize is currently excluded as it will remain the responsibility of the GMB. This is only the beginning and if the murmurs in the corridors are anything to go by this is surely set to grow.
The Android app was the highlight for me. I love understanding systems as much as anyone else but I always remember that that is not the majority. Many people have no interest in understanding their service providers systems they just want them to work and that is something the mobile app addresses. It brings a simple and intuitive interface that even the biggest of Luddites will find easy to learn.
I registered as an individual and found it very easy to do so. All you need to have are an ID copy, Bank account details and proof of residence that are ready to upload. The rest is easy. You will have to allow time for KYC to be confirmed for your account to be active. The app will bring the sort of convenience that such products are supposed to bring.
While we still have questions over some issues such as the cost of warehousing and who pays it so far so good with the ZMX. All indications are that it will be a hit going forward though we understand it may take time for things to stick.