Chronicle Editor
Judith Phiri, Business Reporter
THE warehouse receipt financing being facilitated by the Zimbabwe Mercantile Exchange (ZMX) continues to be a game changer in agricultural post-harvest financing as it enables financiers to provide credit to farmers and other warehouse receipt holders.
Launched in 2021, ZMX is an agricultural commodities trading platform with automated electronic warehousing and receipting capabilities.
ZMX launched its weekly Agricultural Commodities Auction system, which is conducted online every Wednesday with the aim of assisting farmers in getting market-determined prices.
Per the ZMX trading rules espoused in Statutory Instrument 184 of 2021, the auction system started with maize and eventually now includes all other commodities listed on the exchange.
In an update, ZMX said: “Warehouse receipt financing is a type of financing that is based on the use of a warehouse receipt as collateral for a loan. Agricultural financiers such as banks, micro-finance institutions (MFIs), contractors, input suppliers and others can utilise the ZMX warehouse receipt financing platform to enhance their agricultural lending business.”
It said key features include automated registration, credit terms parameter setup, collateral management, stop order management facility and foreclosure facility, among other things.
ZMX said key benefits were low-cost business acquisition, diversification of loan portfolio, risk mitigation, user-friendly interface, uses modern technology and low default rates.
Among them are access to a new market and growth, low transaction costs, strategic flexibility and socially responsible investment that contributes to sustainable agriculture to mention just a few.
Meanwhile, last month, in a move set to revolutionise the maize milling industry, Financial Securities Exchange (Finsec) private markets and ZMX announced a strategic partnership to boost millers’ access to much-needed order finance.
The collaboration aims to address cash flow challenges and unlock growth potential for maize millers across the nation.
In a post on X (formerly Twitter), Finsec said: “Millers, grind out your profits with Finsec’s grain on credit facility. Secure grain on credit through order finance options. Financing is available at very affordable terms.”
ZMX chief executive officer, Mr Collen Tapfumaneyi said maize millers are the backbone of Zimbabwe’s food security and play a vital role in processing the staple grain for the country’s millions.
“Through this innovative partnership, Finsec’s order finance programme provides maize millers with the financial muscle to overcome these challenges. The financing model involves access to grain on credit for millers through the ZMX exchange platform,” he said.
The ZMX infrastructure will be responsible for registering, vetting and screening of the small and large-scale milling agro-processors from which qualifying applications will be submitted to the liquidity provider.
Upon approval, the milling company will receive the commodity through the ZMX platform with the liquidity provider advancing payment to commodity suppliers on behalf of the buyers. The repayments will be done as guided by the transaction details.
Londile Moyo
Online Reporter