Trading Floors Can’t Feed Africa

Mondelez International’s February announcement that it would increase production of coffee from Ethiopian beans 50 percent in two years was good news for the Ethiopia Commodity Exchange, started in 2008 with the help of foreign donors to improve food distribution in a country where millions often went hungry. By government decree, almost all buying and selling of coffee, sesame seeds, and navy beans for export must take place on the exchange.

The ECX , which got funding from the U.S. and the United Nations among others, is one of at least eight commodity exchanges started in sub-Saharan Africa over the past two decades with the aim of improving food security for local populations. Many have failed, and only South Africa’s is thriving without government support. Exchanges are a distraction from other initiatives that would better serve poor farmers, says Nicholas Sitko, a Michigan State University agricultural economist who’s based in Zambia, where a commodity exchange closed in 2012. “We’ve learned that no amount of money pumped into them and no amount of government effort to get them off the ground can force them to work,” he says.