AFGRI the leading agricultural solutions and industrial foods company has launched a successful entrée into collateral management across Africa. So successful has been the drive that Collateral Management International (“CMI”) (an AFGRI owned company) has more than 100 sites under collateral management and more than 400 sites to which stock monitoring and inspection services are provided across 14 African countries.
Just what is collateral management? Collateral management includes on site stock management (similar to acommodity exchange storage function) as well as independent control of commodities in third party facilities on behalf of a financier or trader.
Just what is stock monitoring and inspections? Stock monitoring is a function which monitors movements, actions and controls on a site, and includes on-site stock movements, vessel discharge supervision and logistics monitoring between locations. Inspection services is a function usually undertaken between sellers and buyers of commodities, where the two parties are not physically present at the loading site or port and requires independent verification such as grade, quantity, container seals, rail cars, trucks or vessel holds. The inspection report or certificate is then used as part of the transaction to control payment and risk between the buyer and seller.
The collateral management structure can be explained as follows. Banks wanting to take commodities as collateral to finance against an instrument (i.e. warehouse receipt), require an independent, reliable third party with impeccable people, commodity handling and storage knowledge, systems, governance and ethics to guarantee quality and/or quantity of a particular commodity via a warehouse receipt in order for the bank to finance against this instrument. Normally commodities in a collateralised storage facility, are either imported to or exported from his location. Once the commodity leaves the storage facility or before it arrives at the storage facility, stock
monitoring or inspection services compliment the collateral management discipline and gives clients (such as banks and traders) an all-inclusive service throughout the supply and logistics chain.
CMI is just such a third party operator which has accreditation from all local South Africa banks as well as most African banks and the most prominent large international European banks. CMI is further accredited by large commodity trading houses such as Louis Dreyfuss, BTG, Ameropa,Olam, METL etc.
AFGRI has, as a dedicated focus area, the grain value chain and this is another example of how AFGRI, with more than nine decades of agricultural experience, is harnessing its knowledge and expertise to offer a viable solution to clients at third party storage facilities. Not only can CMI manage sites on behalf of a third party, it can also store commodities in AFGRI’s extensive storage capacity in Africa in locations such as Zambia and Uganda.
CMI has an impeccable record of confidentiality, maintaining integrity between third party clients and AFGRI operations, diligence, accuracy and corporate governance and with strict compliance in place has gained the trust of large international and local banks and traders. In addition to CMI’s ability to provide collateral management to its clients for commodity funding purposes, it is able to assist clients throughout the value chain with storage and inspection related services associated with port and logistics activities required, an all-encompassing service offering making transaction flow easy and less complicated for banks and traders.
Sadly much of the downfall of agriculture in Africa hinges on the lack of storage, stock finance, guarantees and the ability to market and sell maize and other commodities when and where producers decide to sell. AFGRI, again through CMI, has joined forces with African Exchange Limited (“AFEX”) and its subsidiary in Rwanda, East African Exchange (“EAX”) and signed an agreement to work together with the Rwandan Ministry of Agriculture and Animal Resources to provide storage and warehousing services to support farming cooperative across Rwanda. Through the exchange, CMI will manage 13 warehouses, set up by the Rwandan Government in strategic production areas. Aside from storage solutions and management CMI will include all aspects of commodity management. In Nigeria CMI will be managing an initial seven Nigerian Government storage facilities sites in five states, namely Kanu, Kaduna, Katsina, Zamfara and Kebbi for AFEX, located within the grain belt of Nigeria.
AFGRI is a leader in silo or warehouse inventory management with the ability to provide electronic silo (warehouse) receipts which can be used as collateral. This technology is in use in CMI and electronic warehouse receipts can then be used by the farmers to trade their grain on the exchange on world class NASDEQ trading platforms.
Chris Venter, AFGRI’s CEO says, “AFGRI has a vision of food security for Africa. We are passionate about helping people and this solution drives directly to the heart of the problem many farmers face, the inability to store and market the grain they have worked hard to harvest. Together with Government, the EAX and the AFEX, CMI is able to help with the warehousing function, verify quality and quantity and help the farmer market the commodity and in this way, earn the money they have worked hard for. We are extremely proud of this solution that has been successfully implemented in Rwanda.”
CMI focuses not only on grains but also on fuel, ground nuts, vegetable and palm oil, cotton, sugar, rice and coffee, to name a few commodities.
Issued for: AFGRI Limited
Contact: Chris Venter, Chief Executive Officer (CEO)
Account: Keyter Rech Investor Solutions
Contact: Vanessa Rech Lynne van der Schyff
Tel: 087-351-3814 or 083-307-5600 087-351-3815 or 082-920-4395
Date: September 2014