Constraints to the Development of Commodity Exchanges in Africa: A Case Study of ZAMACE

The development of agricultural commodity exchanges in Africa has become an increasingly popular strategy for addressing some of the ills plaguing African food markets, including poorly developed risk management systems, high transaction costs, and limited price discovery. However, despite substantial support from donors and, in some cases, national governments, commodity exchanges in most African countries are having difficulties getting off the ground. While previous studies (Rashid, Winter-Nelson, and Garcia 2010) highlight the fact that low trade volumes passing through African commodity exchanges limit their development, the question of why exchanges are thinly traded remains poorly understood. Using the Zambian Agricultural Commodity Exchange (ZAMACE) as a case study, this report identifies and explores six mutually reinforcing factors contributing to low trade volumes passing through ZAMACE. By analyzing why trade volumes and participation on ZAMACE have remained both low and erratic, this report seeks to provide policy makers and donors with greater clarity about the specific impediments to be overcome in developing commodity exchanges in the region.

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 Record created 2017-04-01, last modified 2018-01-22

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