Generally, farmers, especially small holders, are often perceived to be very risky borrowers by commercial banks, and therefore unattractive candidates for financial institutions. The East Africa Exchange (EAX) was established to come up with a tangible remedy to this through its EAX Warehouse Receipt System.

Sellers who are EAX certified and registered members bring their harvest for storage as a security and can obtain a bank loan of up to 70% of the market value of their produce.

The farmer or trader can then apply for short-term loan from any of the EAX member banks using the warehouse receipt as sole security and pay the bank when prices are right for a sale, usually between 3-5 months.

The company was created in 2014 to further strengthen EAC regional integration by developing a common and coherent financing in agriculture, energy and mining sectors. It is based in Kigali, but has branches in Kenya, Uganda, Tanzania and DRC.

"EAX strives to assure the market of quality, quantity, prompt delivery and cash payment. The grains are stored and managed professionally in our certified warehouses. This guarantees quality of the grains during storage duration, hence no storage losses registered,” says Joshua Rugema the EAX Rwanda Country Director and Head, East Africa.

While the produce are in the EAX certified warehouse, the farmer will be supplied with daily price information by the EAX on their mobile phones so that they can monitor the prices and sell when it is favorable.

Since it started, EAX has registered members ranging from commodity buyers & sellers; commercial banks to commodity brokers.

Currently EAX has registered 200 small and large farmer cooperatives covering about 80,000 small holder farmers who are seeking secured storage, quality improvement of their harvest, inventory management and financing, secured markets and better prices.

EAX has 12 regional traders, 17 national traders, 7 brokers, 22 agribusiness traders( national and regional ) and 6 financial institutions namely The Development Bank of Rwanda (BRD), ECOBANK, Urwego Opportunity Bank, KCB, Equity Bank and GT Bank that have national and regional coverage. The Development Bank of Rwanda (BRD) has provided them with 2.5 Billion Rwanda Francs to be used in the financing of Electronic Warehouse Receipts. 

EAX Rwanda has 12 certified warehouses and silos located in Kayonza, Nyanza, Bugesera, Rwamagana, Musanze, Karongi, and Gicumbi districts with the total storage capacity of 23,800 MT.

The commodities stored in the EAX Certified warehouses include maize, beans, soy, wheat, sorghum, paddy and rice.

All members’ representatives are trained in-house or through collaborations with other EAX partners on; EAX services, Post-harvest management, commodity prices, warehouse receipts trading, warehouse receipts financing, trade settlement, NASDAQ usage, trading through EAX brokers among others.

Key achievements

"We are proud that we have contributed to reducing farmers’ post-harvest losses as the storage and care of the commodity is transferred to EAX certified warehouses equipped with appropriate facilities and collateral management expertise to ensure quality and quantity is preserved,” says Rugema.

The MINAGRI statistics indicate that post-harvest losses for all major crops reduced from 30% 2010 to 15% in 2015 and the target is to reduce it to less than 5% by 2017.

Among the key statistics, as of year 2015; a total of 54 warehouse receipts got financed by commercial partner banks with the value of Rwf 199,276,347 benefiting 35,200 farmers.

A total of Rw1,044,273, 741 worth of commodities have passed through the NASDAQ Electronic trading platform.

According to Rugema, the EAX contributed a lot to the improvement of quality and quantity of grains that also led to better prices.

Through the NASDAQ Electronic trading platform, EAX provides a link where buyers and sellers meet, so marketing and transaction costs are substantially reduced.

EAX provides fair and transparent price discovery system where farmers decide on the prices they want to sell their commodities.

In addition, to the Electronic Warehouse Receipts (eWRS), they are currently paying farmers in 2 days through mobile money .

Going forward

In the first years of its implementation, the EAX warehouse receipts system faced numerous challenges; key was farmer’s difficulty in adopting the concept of delaying sales until later when prices were better, as well as paying for essential EAX services such as cleaning, drying and packaging to meet the East Africa Community specification for grains which EAX is adopting.

Some farmer cooperatives also prefer to be paid fully for their harvest rather than going through commercial banks for 70% of the harvest value.

Fortunately, through constant training and mobilization the farmer’s mindset keep on changing for the better.

As a way forward, Rugema says that the EAX seeks to keep contributing to the government target of reducing post-harvest losses through expansion of professional harvesting across the country as well as training farmers on different aspects of proper harvesting.

EAX also aims at allowing farmers more access to better markets and prices of their produce by maximizing access to the EAC market which is over 150 million people and looking for more partnerships with major international buyers among others.