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ECX brochure Oxfam-Rockefeller 2013

September 3, 2013

The Catalytic Innovations in African Agriculture Centennial Series was developed as part of The Rockefeller Foundation’s Centennial publications. The Rockefeller Foundation, as an institution with a long history in agricultural innovation, commissioned this series to highlight promising developments in African agriculture, agricultural markets, and value chains on the continent. The projects and programs featured were selected from a review of nearly 150 such initiatives based on criteria that included a focus on smallholder farmers.

Read more by clicking on the link below.

ECX brochure Oxfam-Rockefeller 2013

Eleni Gabre-Madhin Receives Honorary Doctorate in Ethiopia

July 6, 2013

Chairman and ceo of eleni LLC, Dr. Eleni Gabre-Madhin has been recognized not only worldwide for her vision and leadership in building commodity exchanges to transform lives in frontier economies, but also in her home country, Ethiopia.

Chairman and ceo of eleni LLC, Dr. Eleni Gabre-Madhin has been recognized not only worldwide for her vision and leadership in building commodity exchanges to transform lives in frontier economies, but also in her home country, Ethiopia.

On July 6, Dr. Eleni received an Honorary Doctorate from the University of Gondar, a first in its 59 year history.   The University’s President, Prof. Mengesha Admassu noted that

On the occasion of its commencement ceremony and for the first time in its long history, the University Senate  gladly decided to honor a prominent model of female might, Dr. Eleni Zaude Gabre-Madhin, by awarding her an Honorary Degree of Humane Letters (DHLitt) in appreciation of the socio-economic contributions she has made in establishing and effectively running the Ethiopia Commodity Exchange (ECX) for the benefit of the Ethiopian farmers and the country at large.”

At a gathering of more than 10,000, Dr. Eleni received the degree in the presence of 4,562 graduates and their families in Gondar, a historical town in northern Ethiopia, and called on the graduates to never forget that a committed individual can change the world, to always rely on integrity, and to harness the power of love of self, God, and country as they embarked on their lifelong journey of learning and achievement.

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Viewpoint

May 24, 2013

“Africa can realise its full potential when it decides to not emulate any other region and to realise that Africa is actually forging a whole new history. The force of the youth, the power of mobile technology – the trends we are seeing in Africa – are actually going to make Africa have its own unique historical path…”

– Eleni Gabre-Madhin, How We Made It In Africa-May 2013

Eleni Gabre-Madhin’s next big idea: to build commodity exchanges across Africa

May 24, 2013

Gabre-Madhin rose to prominence a few years ago when she founded and became CEO of the Ethiopia Commodity Exchange (ECX). Since them Gabre-Madhin has become somewhat of an authority on African agriculture, rubbing shoulders with top business leaders and politicians. For example, Gabre-Madhin says that the person who has had the biggest impact on her career in recent years is billionaire mobile telecommunications entrepreneur Mo Ibrahim.

Established in 2008, the ECX is generally seen as a great African success story. Before the ECX, Ethiopia’s market for agricultural commodities was characterised by high costs and high risk of transacting. Sellers were struggling to find buyers and vice versa. Commodity buyers and sellers traded only with those they knew, to avoid the risk of being cheated. Enforcing contracts was also a challenge. Only one third of output reached the market. Trade was done on the basis of visual inspection because there was no assurance of product quality or quantity, which drove up market costs, leading to high consumer prices. For their part, small-scale farmers, who produce 95% of Ethiopia’s output, came to market with little information and were at the mercy of middlemen, unable to negotiate better prices for their crops.

The idea behind the ECX was to bring buyers and sellers of agricultural commodities, such as coffee and sesame, together in an open and transparent way. These days Ethiopian farmers can receive the latest crop prices on their mobile phones, or from electronic boards situated across the country. This information explosion has allowed 15 million coffee farmers to increase their share of the final price from 38% to 65%, as the margins to middlemen have narrowed.

The main reason for the success of the ECX is that it was tailored specifically for the Ethiopian market, catering for small farmers and traders. In addition to just providing a trading platform, the ECX built an entire ecosystem of services that includes the warehousing and quality grading of commodities.

A new chapter

Gabre-Madhin is now, however, aiming for bigger things: to build commodity exchanges across Africa and other frontier markets. Last year she stepped down from her position at the ECX to form Eleni LLC. The company has already attracted investment from the likes of Morgan Stanley and rock star activist Bob Geldof’s 8 Miles private equity fund.

The company is betting that after seeing the success of the ECX, other African countries now also want their own commodity exchanges. “Commodity exchanges throughout the world have emerged when buyers and sellers needed to connect in an efficient, reliable and transparent way. If you look at a global map of commodity exchanges around the world, you would see a glaring blank over most of Africa,” she says.

Gabre-Madhin believes that one of the biggest challenges facing farmers in Africa is finding markets for their produce. She says that improved farming techniques mean little if farmers can’t sell their crops.

“It is a green revolution arrested in its tracks if you can’t figure out how to market [farmers’ crops]. Every conference you go to, when they talk about agriculture, they end up saying access to markets is the big problem. It is the thing that nobody thought about when everyone was rushing to talk about production and productivity and better inputs and water and all those other things.”

One of the ways the ECX generates revenue is through trading fees – it takes a percentage on each transaction. There are also fees for things such as warehousing and laboratory certification. The ECX broke even in its second year of operations, and by the third year the exchange was profitable.

Gabre-Madhin believes that a commodity exchange needs to offer farmers and traders a compelling reason to use its platform. It needs to enable people to run their businesses better. “At the end of the day, if an exchange is not adding value to people’s lives – if it is not easier to use the exchange than not to – then an exchange cannot survive, cannot sustain itself. The value proposition at the core is efficiency, reliability, transparency.”

She is however not planning to merely replicate the ECX model in other countries. “There are still more innovations for us to discover as we go. Eleni, as a company, is not interested in replicating the Ethiopian model elsewhere, just as we were not interested in replicating the Chicago or South African [commodity exchanges] for Ethiopia… What we are doing – and what we are good at – is finding the sweet spot of innovation that will bring the highest impact.”

Gabre-Madhin says there is likely to be an announcement of a new exchange in the coming months, although she remains tight-lipped on exactly where this will be.

Africa should follow its own development model

Born in the Ethiopian capital Addis Ababa, Gabre-Madhin has held senior roles at the World Bank and the International Food Policy Research Institute in Washington, before taking up the ECX job.

She is a firm believer that Africa should follow its own growth path, and not blindly imitate Western or Asian development models.

“Africa can realise its full potential when it decides to not emulate any other region and to realise that Africa is actually forging a whole new history. The force of the youth, the power of mobile technology – the trends we are seeing in Africa – are actually going to make Africa have its own unique historical path…”

By: Jaco Maritz

http://www.howwemadeitinafrica.com/eleni-gabre-madhins-next-big-idea-to-build-commodity-exchanges-across-africa/26772/

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