The Ethiopian Commodity Exchange announced that 117 million Br in loans were accessed through warehouse receipt financing in the past three months. Since last year ECX has facilitated warehouse receipt financing with selected banks which allows farmers, traders, and agri-processors to use stored agricultural commodities as collateral to obtain loans. With technical support from the International Finance Corporation (IFC), the system helps reduce post-harvest losses and improves access to finance for sector actors. By depositing commodities in licensed warehouses, participants receive receipts that can be used to secure credit from local banks. Previously, farmers had to sell their produce at low prices just to cover upcoming expenses. This arrangement allows them to wait for the opportune time to sell while getting bank financing to cover expenditures. Wondimagegnehu Negera, Chief Executive Officer of ECX, told Fortune that “banks will not lend 100pc, but rather 70pc of the collateral amount to hedge against unstable international prices. This goes towards farmers’ working capital.” The Exchange offers receipts after examining quantity and quality. He stated that 11 banks are currently working with ECX towards warehouse receipt financing at prevailing interest rates, similar to other loan types. The only difference, as per Wondimagegnehu, is that the collateral will be the produce’s value. The Exchange has relayed 5.6 billion Br in the last three months to sellers having received 6.7 billion Br from buyers through the trading of 25 commodities. It is working to include industrial produce like hides and skins as well as salt to its trading floor after recently adding beer barley.
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