Commodity exchange builder teams up with pan-African bank

Trading at ECX, (credit www.ecx.com.et)

Trading at ECX, (credit www.ecx.com.et)


A dynamic African builder of turnkey commodity exchanges, eleni LLC, has teamed up with pan-African Ecobank through a Memorandum of Understanding (MoU) to work together to accelerate development of African agriculture. Ecobank was also recently announced as a keystone investor in the Ghana Commodity Exchange being set up by eleni, reported here.

Ecobank Transnational Incorporated (ETI), with 600,000 shareholders and listed on the Nigerian and Ghana Stock Exchanges and the Bourse Regionale des Valeurs Mobiliers (BRVM), is the parent company of the leading independent pan-African banking group, Ecobank. It is incorporated in Lomé, Togo and has presence in 35 African countries as well as France, Dubai, London and Beijing.

The co-founders of eleni LLC are Eleni Gabre-Madhin, Keith Thomas and Jawad Ali, who previously established and led the Ethiopia Commodity Exchange. The ECX traded $1.4 billion in spot contracts during its 4th year of operations and can claim to have improved the lives of millions of smallholder farmers in Ethiopia.

Their new firm, eleni, was launched last year as a turnkey commodity exchange builder for frontier markets skilled exchange investors as announced in January 2013, including Morgan Stanley (www.morganstanley.com), with a string of profitable and successful exchange investments and market centre worldwide, and the International Finance Corporation (www.ifc.org) who had put up seed capital of $5 million. Its business model is to provide design, finance, build, technology and operations support services. It has projects in Ghana, Cameroon, Mozambique, and Nigeria and aims to transform African agriculture through creating functional commodity exchanges using its experience. In May 2013 Reuters reported that Bob Geldof’s 8 Miles private equity fund had made eleni its first investment, joining 8 Miles and the IFC were co-investors into the GCX alongside Ecobank.

Ecobank, represented by group chief executive Albert Essien, and Gabre-Madhin for eleni signed the MoU on 22 May during the African Development Bank meeting in Kigali.

According to the press release, Essien said: “As well as increasing market transparency and reducing transaction costs, commodity exchanges play a crucial role in the monitoring and assessment of risk. Instruments such as warehouse receipts reduce uncertainty and improve access to finance across the value chain. We look forward to collaborating further with eleni to enhance Africa’s agricultural financing capabilities.”

Gabre-Madhin added: “We are very excited to be working with one of Africa’s leading financial institutions, with a solid pan-African focus, as this opens up a tremendous opportunity to establish the leading platform for commodity-related payments and transactions across the continent.”

Ecobank signs for $1.8bn of trade finance

Also at the meeting, the African Development Bank (AfDB) and Ecobank signed a $200m trade finance facility, which has 2 components and will support approximately $1.8bn of trade transactions in Africa over 3.5 years. It includes a $100m unfunded risk-sharing facility to bolster Ecobank’s capacity as an international confirming bank for trade transactions originated by issuing banks in Africa, and another $100m trade facilitation loan which will be used by Ecobank to provide trade finance support to local corporates and SMEs in Africa.

According to a release issued by Ecobank, Mr Essien said on 21 May: “This facility would greatly support international and intra-regional trade in Africa..We look forward to an ever-deepening collaboration with the AfDB to provide vital trade finance support to promote regional integration and the development of SMEs across Africa.”

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