The Eastern Africa Grain Council (EAGC) with support from the UK Government project FoodTrade ESA and through partnership with various industry stakeholders has officially launched a private sector-driven, market platform that will link buyers and sellers in staple foods trade in Eastern Africa.
The new G-Soko Platform will bring structure and consistency to trade in grains. It will facilitate title transfer, market transparency, and price discovery – i.e. perform a clearing function. Transaction costs are reduced because coordination through a centralised exchange can cut down costs associated with identifying market outlets, physically inspecting product quality, and finding buyers or sellers.
Specifically, the G-Soko Market Platform will:
- Accelerate utilisation of grades and standards for maize and beans;
- Certify up to 100 regional warehouses and extend use of a regional warehouse receipt mechanism;
- Automate certified warehouses and link them to a transactional ecosystem (e-trade platform) involving all agents within the supply chain;
- Provide real time, transparent market and trade information through the platform to inform buyers and sellers on spot market conditions regionally; and
- Enable farmers utilising the certified warehouses with a mechanism of accessing local financing from participating banks.
During his speech at the launch in Nairobi, 31 July 2015, the Executive Director of EAGC Mr. Gerald Masila said, “The solution is what we are launching today, a link between producer & consumer”. G-Soko will ensure that farmers growing maize and beans in East Africa can sell their product across East Africa through regionally certified warehouses. Once they are issued with a warehouse receipt, farmers can use the receipts as collateral to access financial services, while still accessing a large market across Eastern Africa. This mechanism will cushion them from ‘selling low; after harvest and ‘buying high’ later. Partner banks have already been identified to provide warehouse receipt collateral mechanisms.
Mr John Waibochi, the CEO of Virtual City, said “Its grain bulking feature allows farmers to consolidate and sell their grains at aggregation centres linked with certified warehouses. More importantly, G-Soko will Increase the utilization of East African standards for grain commodities and products because quality assurance is key.”
With FoodTrade ESA’s investment, EAGC will help smallholder farmers improve the quality of their grain by using the grades and standards approved through the East African Community (EAC) in 2013. Farmer’s will sell product into aggregation centres, and these centres will provide the initial check on quality. Warehouses will then issue a Goods Received Note (GRN) which identifies the quality and origin of the grain, enhancing the traceability of the product to its origin.