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Africa Case Study-WH
Africa Case Study-WH
IFC had contracted Agri-commodity inventory management experts from India. Mr. Anand
Chandra and Mr. Shenoy Mathew, as consultants to draw up the National Warehousing
Standards for some African Nations. ( For east purpose students can take Ethiopia as an
example and prepare for the case study.)
Background
Most African nations are predominantly an agrarian economy where agriculture lies at the heart of
government development strategy. Many had in the past has also had to face challenging circumstances
with regards to quality of exports in commodities. Also, the vital food processing industry in the country
has reported challenges with respect to availability of quality raw material when required. The resulting
imports would certainly create a large dent in the country’s already stressed foreign currency reserves.
Mr. Anand Chandra and Mr. Shenoy Mathew, consultants from India, have been identified by the IFC to
help find solution to improve situation. The consultants have a deep understanding of the post-harvest
commodity ecosystems and bring with them core expertise in agricultural warehousing and CCF. IN his
professional capacity, Mr. Anand Chandra is the promoter director of Arya Collateral Warehousing
Services Pvt Limited (Arya) with more than 14 years of experience of Warehousing, Collateral
Management and Commodity Collateralized Finance. Mr. Shenoy Mathew is a General Manager at Arya
with an experience of more than 15 years in the agriculture and warehousing sector. Arya is first
collateral management company to be set up in India and it current stores and manages agriculture
commodities worth USD 350 million. Their detailed resumes are enclosed in Annexure I.
The consultants studied warehousing standards across Africa and Asia. Other relevant globally
acceptable standards were also referred to derive at a comprehensive understanding of a benchmark
most suitable for most African situations.
The research included study of the Standards of commodity warehousing in Uganda (Uganda
Warehousing Receipts Systems Authority guidelines), the Tanzania Warehouse Licensing Board
standards and the draft Warehouse Receipt Bill in discussion in the National Assembly in Kenya.
Warehousing standards and their operationalisation under the Warehousing Development Regulatory
Authority (WDRA) in India were referred to. ISO reference on warehousing of Pulses and Cereals and the
EAGC model were studied in depth for the purpose of arriving at a benchmarking for warehousing
standards.
While the secondary research gave specific pointers on appropriate benchmarks to be deployed, it also
pointed to limited field implementation of many of these standards. This detailed study coupled with
the on-ground experience of the consultants led to the learning that any developed standard would
require itself to be embedded to the ground realities of the concerned constituency. Its success would
hinge as much on its ability to optimise and leverage the existing infrastructure as providing a roadmap
for development of world-class future infrastructure.
Traders’
Farmer Co-operatives
Consumer Co-operatives.
Processors owned warehouses
The observations and conclusions from these visits have had a significant influence on the strategy
adopted by consultants in recommending the National Standards. The following sections document the
key observations and learnings from each of these visits.
Whole sale market observations:
1. Produce reached this market from far flung areas with an average distance of 100 kilometres
and in some cases from as far as 400 kilometres.
2. The market structure was typical of any developing country. Produce moved from primary
producing locations to such tertiary market centers.
3. Market constituents concurred that absence of risk free storage mechanisms resulted in gross
loss of producers value realisation.
4. Absence of assurance mechanisms in existing storage infrastructure was a key disincentive for
storage.
5. Opacity around price discovery remained a grave challenge. Producers were at the mercy of
intermediaries for price discovery.
Observations at New markets developed in many countries with development actor’s
assistance. ( Many African nations have these so called new markets developed at commodity hubs to
improve value chain activities.
Processors
1. Many business are profitable
2. There was a paucity of quality raw material adversely impacting production and long term
sustainability
3. Imports were strained due to shortage of foreign exchange
4. Even though there was enough production of the raw material locally, aggregation of the
desired quality and variety did not happen.
Existing storage structures
Many countries lack scientific warheouses. But have large number of structures across the country
where commodity can be kept safe. But these many not have global standards now or pass any of the
new national standards developed in these countries. 1
1
Excahange officers’ opinions
Observations
1. The role of commodity exchanges as a platform for facilitation and discovery was widely
recognised
2. There existed severe limitations for these exchanges in reaching smallholders in rural areas.
3. Spot exchanges could resolve this challenge by leveraging locally available structures for storage
and delivery.