IFC, ECX, Hold Symposium on Warehouse Receipt Systems for Inclusive Agricultural Finance
Over 200 global participants from the financial sector, trading community, regulatory agencies, and development banks gathered here in Addis Ababa in early June for the first symposium on “Warehouse Receipt Systems for Inclusive Agricultural Finance,” organized by IFC and the Ethiopia Commodity Exchange (ECX).
The symposium provided participants with a venue to foster new partnerships, promote knowledge exchange, and formulate a framework for warehouse receipt financing, a lending technique that allows farmers, producers, and traders of agricultural commodities to access bank loans by pledging their warehouse receipts issued against commodities deposited in warehouses.
Warehouse receipt financing benefits farmers and others who are often unable to secure bank finance because of their inability to meet conventional collateral requirements. It can also reduce farmers’ post-harvest losses by creating a framework of accountability among market participants.
Practitioners have been sharing experiences and lessons learned from countries that have been at the forefront of innovation in agricultural commodity financing. In Ethiopia, the Warehouse Receipts Financing Initiative, launched by ECX and IFC, has helped develop agricultural commodities markets and expand access to financing for small and medium enterprises in the agricultural sector.
“Small-scale producers are the target beneficiaries of warehouse receipts, and Ethiopia is proud of being able to offer access to finance opportunities for this market segment,” said Dr. Eleni Gabre-Madhin, CEO of ECX. “We hope other African countries can learn this product from Ethiopia’s experience.”
“Ethiopia is the most successful example of IFC’s warehouse receipt financing initiative in Africa and we are pleased to share the results from what IFC and ECX have been trying to institutionalize since 2009 with the help of donor communities including Japan, Spain, Belgium, and the Netherlands,” added Georgina Baker, IFC Director, Global Trade and Supply Chain Solutions. “IFC will continue to support the African banking sector with the Global Warehouse Finance Program as well as with advisory services.”
Funded by donors including Japan, the Netherlands, Belgium and Spain and co-sponsored by the Ethiopia Commodity Exchange (ECX), IFC’s Warehouse Receipts Financing Initiative has increased the availability of warehouse receipt financing in the country since its launch in 2009.