Challenges and Prospects of Commodity Exchange in Ethiopia. In the Case of Ethiopian Commodity Exchange (ECX)
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Date
2011-06
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Addis Ababa University
Abstract
The general objective of this study was to assess the current commodity exchange practices in
Ethiopia, in the case of Ethiopian commodity exchange. It also aimed to examine the existing
prospects to commodity exchange and to explore the challenges faced by the Ethiopian
commodity exchange. In order to meet these objectives, the study used qualitative research
methods to explore the current commodity exchange practices in the study area. Consequently,
stratified random sampling was used to select the informants of the study. The findings showed
that the development of commodity exchanges in the country is impeded by the relatively small
size of domestic commodity markets, weak physical and communication infrastructure, a lack of
legal and regulatory environments, and the likelihood of policy interventions, particularly in the
market for staple cereals. Meanwhile, the demand for a domestic commodity exchange for export
crops may be limited due to the availability of well-established exchanges. The paper also
highlights major prospects and future outlooks an exchange in the specific context of Ethiopia.
Finally, The paper also recommend: the goals of risk management and reduced transaction costs
in the Ethiopian commodity exchange might be achieved more effectively through investments
in transportation, warehousing, information services, or other financial institutions which could
support future establishment of a commodities exchange.
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Keywords
Commodity Exchange in Ethiopia