Our vision is to create lasting institutions that will capitalize on Africa's agricultural potential, support African farmers, achieve food security, provide energy security, and improve Africa's overall global trade competitiveness.
Africa Exchange Holdings, Ltd. (AFEX) was founded in 2012 by three investors: Berggruen Holdings takes a long-term, patient capital value-oriented approach and invests across a wide range of industries and asset classes; Heirs Holdings invests in a variety of industries across Africa and looks to create value and catalyze the economic growth of the continent; and 50 Ventures seeks to elevate Africa's global standing by investing in its governance, education, enterprise, and stability sectors.
AFEX's vision is to create lasting institutions that will capitalize on Africa's agricultural potential, support African farmers, achieve food security, provide energy security, and improve Africa's overall global trade competitiveness. AFEX's goal is to establish or transform commodity and securities exchanges in sub-Saharan Africa in support of capital market development.
Commodity Exchanges: Commodity exchanges offer access to organized commodity trading, financing opportunities, and hedging opportunities which allows for price discovery, investment into improved inputs, mitigation of risk, and trade efficiencies. The exchange is facilitated using NASDAQ OMX technology and is accessible anywhere in the world through the X-Stream electronic trading platform.
Warehouse Storage: Warehouse storage is critical complementary infrastructure to any commodity exchange. Properly managed warehouse facilities allow farmers to safely store their harvest without worrying about loss of value until market prices are favorable. An electronic warehouse receipt (e-WR) is issued by the warehouse and represents the stored commodity and is the security instrument that is traded on the exchange. It is only transferable through the electronic system, avoiding issues such as side selling, theft, forgery, etc.
Partnership with the East African Community: Berggruen Holdings signed a Memorandum of Understanding establishing a strategic partnership with the EAC Secretariat to support the goals of regional economic and financial integration. With this strategic partnership, AFEX will seek to share its strengths, expertise, experience, technologies, methodologies, and resources in order to advance the goal of regional integration of capital markets.
The Economist recently named Africa "the hottest frontier" for investing, noting that Africa's shortage of capital "creates an opening for rich-world investors seeking a better return than is available at home." The main markets in Kenya and Nigeria have increased in value by 50% over the past year. The economy of Nigeria grew by 7.1% in 2012, with the East African economies of Rwanda (7.7%), Tanzania (6.5%), Kenya (5.1%), Uganda (4.2%), and Burundi (4.0%) also showing impressive growth. The agricultural sector in sub-Saharan Africa is projected to increase 2.5% annually through 2030 - the fastest growth anywhere in the world.
Amid the resounding growth, African agriculture faces many challenges. The absence of standardized product grades, proof of ownership for commodities, and proper storage facilities limits agricultural potential. Access to markets and finance also pose significant barriers. We see these challenges as tremendous opportunities and intend to invest in Africa's smallholder farmers over the long term to overcome them together.
For investors who desire impressive returns while creating positive social impact, there is no better place than Africa, and there is no better time than today.
East Africa Exchange Expansion
Subsequent to signing an MoU with the East African Community, AFEX proceeded to launch EAX Rwanda as the first-node of a regional commodity exchange. Expansion to the large Kenyan market and the quickly-diversifying Ugandan market is planned to begin this year. EAX plans to open a commodity exchange in Kenya in late 2013, and start auctions in the second quarter of 2014. EAX also plans to open its Uganda operations in early 2014 and begin auctions by mid-2014. Tanzania also promises a productive agricultural sector that provides 85% of Tanzanian exports. EAX submitted an initial proposal to the Government of Tanzania.
In each market EAX will leverage NASDAQ OMX's world-class technology and invest in warehousing and collateral management services to establish an automated trading platform and electronic warehouse receipt system, creating new trading opportunities in the region and internationally.
Nigeria Expansion
The Government of Nigeria is completing the construction of several silo complexes across the country, with a goal to reach 1.4 million metric tons total storage capacity this year. This will create food buffers in the country and combat unsustainable food imports. AFEX identified opportunities to create value within the agricultural value chain by leveraging the Ministry of Agriculture's existing facilities, as well as additional facilities from the private-sector, and develop best practices for the storage and handling of commodities. To this end, AFEX will manage and operate seven warehouses located in major commodity markets and production sites across the country. AFEX will additionally implement an electronic warehouse receipt system in its warehouses as a building block to creating a vibrant exchange in Nigeria.
East Africa Exchange is a wholly owned subsidiary of AFEX, a limited liability company registered in 2012 in the British Virgin Islands, with principal investors Nicolas Berggruen, Tony Elumelu, and Jendayi Frazer. Daily operations of AFEX are overseen by Jendayi Frazer, Managing Partner, and Timothy Shortley, Chief Operating Officer.
Nicolas Berggruen, AFEX Partner Nicolas Berggruen is the Chairman of Berggruen Holdings, a private company which is the direct investment vehicle of The Nicolas Berggruen Charitable Trust. Berggruen Holdings takes a long-term, patient capital value-oriented approach and invests across a wide range of industries, continents and asset classes. Mr. Berggruen is also the founder of the Berggruen Institute on Governance (formerly Nicolas Berggruen Institute), an independent, non-partisan think tank that looks to use the power of the private sector to improve the livelihoods of millions of Africans.
Tony Elumelu, AFEX Partner and Chairman of the Board Tony O. Elumelu, MFR, is the Chairman of Heirs Holdings Limited, an African proprietary investment company with a long-term investment horizon in key economic sectors that can propel Africa's economic development. Heirs Holdings is committed to the economic transformation of Africa through investments that create both economic prosperity and social wealth. Mr. Elumelu is also the Founder of The Tony Elumelu Foundation, an Africa-based and African-funded philanthropy whose mission is to identify and groom African business leaders and entrepreneurs to enhance the competitiveness and growth of Africa's private sector.
Jendayi Frazer, AFEX Managing Partner Jendayi E. Frazer is President and CEO of 50 Ventures, a private investment company that seeks to elevate Africa's global standing by investing in its governance, education, enterprise, and stability sectors. 50 Ventures also offers expertise on internal affairs affecting Africa and African business investments.
Ms. Frazer was the leading architect of U.S.-Africa policy for nearly a decade, serving as the U.S. Assistant Secretary of State for African Affairs from August 2005 to January 2009. Previously she was Special Assistant to the President, Senior Director for African Affairs at the National Security Council, and the first woman U.S. Ambassador to South Africa, appointed in 2004.
Timothy Shortley, AFEX Chief Operating Officer Timothy Shortley is the Chief Operating Officer for AFEX. Prior to joining AFEX, Mr. Shortley served as Deputy to the U.S. Special Envoy to Sudan and as Director of the Sudan Programs Group at the Department of State from 2008 to 2011. He was Senior Advisor for Conflict Resolution to Assistant Secretary of State Jendayi Frazer from 2007 to 2008, and the Director for Africa on the National Security Council at the White House from 2005 to 2007. Previously, Mr. Shortley served with USAID in the humanitarian relief, conflict response, and development sectors from 1995 to 2005, including living for seven years in Rwanda and Ethiopia.
