Despite having 12 commodity exchanges across participating African countries, only four are currently active.

This is among the findings of a study titled Global Commodity Traders and Competition in African Food Markets, conducted through the African Competition Forum.

Agriculture remains a major pillar of African economies, contributing significantly to employment, economic growth, food security and poverty alleviation.

Despite its vast agricultural potential, Africa remains a net importer of agricultural products. This is largely attributed to competition from global markets, low agricultural productivity, inadequate post-harvest infrastructure and limited local value addition.

International Relations Specialist at the Competition Commission South Africa, Precious Mathilde, stated that the cross-country study highlights the significant influence commodity traders have on food prices and the broader agricultural economy.

"Given their impact on food security and pricing, this study on the role of commodity traders in the African economy is both important and timely. The global commodity traders tend to be among the largest traders in African countries, operating alongside smaller regional and national traders. Their dominance in trading is entrenched by their scale, vertical integration, financial capacity, and global networks. Vertical integration means that global commodity traders control much of the value chain, involving input supply, contract farming, storage, transport, processing, and export marketing."

The study further identifies several competition concerns that African competition authorities could address through enforcement measures within the agricultural sector.

"These concerns are as follows: vertical integration and concentration by global commodity traders are likely to create artificially high barriers to entry or expansion for competing smaller local, regional, and global traders. One means by which this occurs is through financing arrangements linked to offtake agreements for commodities, giving global traders control over much of the supply. Control of supply enables extensive self-dealing downstream through storage, logistics, and processing. The extensive use of over-the-counter trading reduces transparency and efficient price discovery, allowing the better-informed global traders to potentially manipulate pricing in African markets."

The findings draw on insights from participating countries and regional bodies, including Angola, COMESA, Kenya, Malawi, South Africa, Tunisia, Zambia and Zimbabwe.

They highlight the need for stronger competition oversight to promote fairer and more transparent agricultural markets across the continent.