With her new company, Eleni Gabre-Madhin aims to take the commodity exchange momentum that started with the Ethiopian Commodity Exchange, to the rest of Africa. Report by James Jeffrey in Addis Ababa.
The offices of commodity exchange company, eleni, occupy the top two floors of Tracon Tower, where one can gaze north and south along the teeming wide thoroughfare that is Churchill Avenue in the heart of Addis Ababa. Construction cranes can be seen silhouetted against the Ethiopian capital’s skyline, hovering over a landscape and an economy very much in transition.
Eleni, which specialises in building and supporting the operations of exchanges for frontier markets in Africa, also has possession of the tower’s roof space, where the plan is to open a gym and maybe even a cafeteria.
Currently there are only about 10 employees within this wide-open sprawling office space, and employees admit the premises moved into a month ago are a little cavernous presently. But that’s all part of the plan.
“I learnt from my experience with ECX, where we ended up bursting at the seams,” says Eleni Gabre-Madhin, chief executive of eleni, launched in February 2013, and former chief executive of the Ethiopian Commodity Exchange (ECX). “So when we moved in here I went for a little extra room. Which we are going to need – we’re ramping up.”
Gabre-Madhin is credited as being one of the key founders behind the success of ECX, which, since its launch against the odds in 2008, has grown to handling spot trades amounting to more than $1.2bn annually in coffee, wheat, maize, haricot beans and sesame. By 2012, some 2.4m farmers were represented by 193 cooperatives registered as sellers, with a network of 55 warehouses spread across the country.
Now Gabre-Madhin aims to repeat the same success of ECX in other African countries although she emphasises that there will be no cookie cutters found when it comes to the execution: “I’m not interested in taking the Ethiopian model and replicating it,” Gabri-Madhin says. “This is about scaling out and putting on our innovation visors. Innovation is in our DNA.”
When I met Gabre-Madhin, she had just returned from a visit to Ghana, where the Ghana Commodity Exchange (GCX) is due to be launched by early 2015. Other countries that have established a memorandum of understanding (MOU) with eleni to establish commodity exchanges include Cameroon, Nigeria and Mozambique. Gabri-Madhin’s Ghana trip also included a stop-off in Tanzania for high-level discussions about establishing a commodity exchange there. Other countries having similar talks with eleni include Sierra Leone, Kenya and Angola.
“The African commodity exchange momentum is real,” Gabre-Madhin says. “Ghana’s exchange has every potential to become a leading West African hub for globally traded commodities.”
Key to eleni’s approach is tailoring commodity exchange models to the needs and capacities of local markets. That’s why in Ethiopia, where telecommunications are often strained, and rudimentary in rural areas, ECX offers a service allowing farmers to call a number and hear automated messages relaying up-to-date trading information in the Amharic, Tigrigna, Oromifa and Guragigna languages.
Telecommunications in Ghana are more robust, enabling eleni to focus on leveraging mobile technologies, including exploring ways to take advantage of computer cloud service technologies to minimise costly infrastructure and streamline upgrading capabilities. “There’s a mobile revolution all other Africa, so we want to find out how to use that better,” Gabre-Madhin says. “We want to do things nimbly, and lower costs offered to markets.”
At the same time, eleni can draw on lessons learned from ECX to the advantage of new commodity exchanges. Currently, ECX and its 55 warehouses have reached their storage capacity limits, the result of not enough investment being allocated for infrastructure and its potential expansion at ECX’s creation, Gabre-Madhin says, noting that within the next two years its most likely ECX will look for investors to expand its warehouse manifesto.
As a result of ECX’s experience, Gabre-Madhin points out, GCX aims to secure enough private investment for the exchange and for its accompanying warehouse system, thereby providing more flexibility for storage and capacity growth.
“We’re not leaving anything to chance,” Gabre-Madhin says.