A great African success.

In 2008, when no one believed it was possible, we had a bold vision to launch the Ethiopia Commodity Exchange (ECX). This exchange became the first of its kind in Africa, and is now hailed as an innovative model and recognized globally as a unique African success.

Our success is based on the things we did differently. We first studied and understood what the underlying problems were facing market actors on the ground.

We then designed a unique exchange: a spot first exchange with a holistic operational scope and appropriate technology.

Most importantly, we tailored our design to the millions of very small farmers and traders that we aimed to serve.

 
Empowering millions of small farmers and traders.

Empowering millions of small farmers and traders.

ECX – an efficient, modern trading system in action.

ECX – an efficient, modern trading system in action.

Like all great ideas, these innovations have now become conventional wisdom.

Although tailored to a frontier market context with weak infrastructural, human, and institutional capacity, we still aimed high in world class standards of performance:

  • An electronic warehouse receipt system with a fully integrated network of warehouses.
  • An efficient modern trading system with standardized spot contracts.
  • A real-time market data system transmitting prices in seconds from trading.
  • A ‘T+1’ or next day payment clearing and settlement system, the only one in Africa.

The results speak for themselves.

Integrity.
With quality grading, weighing, and warehouse receipting carried out at ECX warehouse sites, farmers and rural traders no longer wonder what quality or weight they bring.

Buyers are guaranteed the quality and quantity they paid for.

Zero default.
Trading on the basis of warehouse receipts and buyer pre-trade cash deposits ensures a successful transaction. ECX transfers title and payments between buyers and sellers on the next day after trade.

In over five years of operation, hundreds of thousands of transactions have been conducted without a single payment default, trading order error, or system failure.

Warehouse operation in central Ethiopia.

A warehouse operation in central Ethiopia.

Young coffee farmer in southern Ethiopia.

A young coffee farmer in southern Ethiopia.

Transparency.
To level the playing field, ECX transmits price and trade data in real time to 100 electronic tickers in rural markets, to 1.1 million callers monthly on IVR call-in service, and to 800,000 subscribers on mobile SMS.

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.

Efficiency.
ECX trading connects 350 members and 15,000 clients, who traded over 600,000 tons and US$ 1.4 billion in 2012.

More than 2 million farmers are directly engaged in the market through cooperatives who trade in ECX.

Clean and sorted coffee beans.

Clean and sorted coffee beans.

ECX in Addis Ababa, Ethiopia.

ECX in Addis Ababa, Ethiopia.

ECX by numbers.

‘We believe that this initiative requires great political will, and we’ll have to align the financial sector as well as the ICT sector, and really even the underlying legal framework.’

— Eleni Gabre-Madhin

For more information about ECX visit www.ecx.com.et