Rwanda-based East African Exchange (EAX) has partnered with AFGRI’s risk management department to be its collateral manager, a development that will further strengthen and cushions EAX and farmers against risks involved in grain trade. 

Collateral management is where third parties guarantee the quality and quantity of a farmer’s product in a facility.

Farmers are provided with electronic warehouse receipts, which can be used as collateral in banks. The receipts also facilitate trade of their grains on commodity exchanges.

Commenting on the development, Alfah Kadri, the EAX Rwanda country manager, said the firm will be tasked to safeguard the grain and ensure quality.

"They will clean the grains, dry, grade and re-bag them to enhance quality. As a result, the produce will fetch better prices on the market,” Kadri explained.

He said the collateral manager will manage stock in warehouses to reduce post-harvest losses.

Currently, post-harvest losses in warehouses are at between 15 and 20 per cent. Kadri added that AFGRI provides guarantees for the farmers and links them to financial institutions for credit facilitation.

A fortnight ago, the EAX said it was discussing with local banks so they can lend to farmers at affordable rates.

Chris Venter, AFGRI chief executive officer was on Thursday quoted by foreign media saying CMI provides collateral management and stock monitoring services in 500 storage facilities in Africa.

Venter said AFGRI, through CMI, had partnered with the African Exchange (Afex) and its Rwandan-based subsidiary, EAX; and will provide storage and warehousing services for farming co-operatives in 13 government-established warehouses in Rwanda.

AFGRI is a South African agri-services and industrial foods group that established its Collateral Management International (CMI) business in 2008.