Malawi moves to enact warehouse receipt bill

Malawi is in advance stages of consolidating work of two commodity exchanges currently operating in the country to make them vibrant, principal secretary for Industry and Trade Charles Kambauwa has said.

The country has two commodity exchanges, namely Agricultural Commodity Exchange for Africa (ACE) and AHL Commodity Exchange (AHCX).

Kambauwa told Business News that apart from consolidating work of the two commodity exchanges, government will soon enact the warehouse receipt bill into law.

The two exchanges have since welcomed by the intended move government, saying it will support the existing systems and will ensure their growths and development.

AC chief executive officer Kristian Moller, responding to a questionnaire, said they are involved in the drafting of the Warehouse Receipt Bill and he is leading a working group under the Ministry of Industry and Trade.

“With funding from the World Bank, the Ministry of Industry and Trade had a contract with a renowned international lawyer and expert in this type of regulation. The outcome will be the most enabling bill produced on this continent, perhaps even the world,” he said.

Moller said the Act will protect the owner, financier and buyer of a warehouse receipt and make it easier and less risky to invest in agriculture.

“ACE hopes this will mean that banks will provide more financing and the agricultural value chain will become more liquid as a result. The bill gives authority to the Minister of Industry and Trade to appoint a regulator of warehouse receipts systems.

“The regulator has not been selected, but most stakeholders believe this should be the Reserve Bank of Malawi. When the regulator has decided and delegated authority, we will have to start the work of creating the actual regulation of warehouse receipt system,” he said.

AHCX general manager Davis Manyenje also welcomed the enactment of a Warehouse Receipt Bill into law.

“Our reading of the bill as it is now is that once it is passed into law, it will not negatively affect operations of AHCX. The bill proposes to provide for general areas of warehouse operations and issuance of warehouse receipt.

“We issue electronic warehouse receipts. The bill recognises both electronic and tangible warehouse receipts,” he said.

Manyenje said the two commodities exchanges have been championing the use of warehouse receipts in modern commodity trading.

He said in the absence of the law, it has taken them a lot of effort to enlighten other stakeholders about warehouse receipts.

“There are some stakeholders, both domestic and international, who have been uncomfortable with the fact that warehouse receipt systems were being put in place without enabling legislation,” he said.

Manyenje said they hope the legislation will be robust enough to enable thriving of warehouse receipt system currently in use.