NARRATION: EENI'S STRATEGY FOR BUILDING THE ECX IS SORT OF WALK BEFORE YOU RUN. START WITH A FEW COMMODITIES, WORK OUT THE KINKS, TAKE ON MORE, SLOWLY, WHEN YOU KNOW THE SYSTEM WORKS.

ELENI GABRE-MADHIN (VO) We started with maize – corn – beans, and wheat. So it was the slow start phase.

NARRATION: ANOTHER OF THE EARLY PRODUCTS TARGETED BY THE ECX IS SESAME, THE FASTEST GROWING EXPORT CROP IN ETHIOPIA. HUGE QUANTITIES ARE SHIPPED TO CHINA, INDIA AND THE MIDDLE EAST.

NARRATION: BUT THE PROMISE OF BIG PROFITS MEANS THE SESAME INDUSTRY IS RIFE WITH RISK. THE SAME PROBLEM THAT CONTRIBUTES TO RECURRENT FAMINES – the lack of an efficient market – IS EXACERBATED IN THE ROUGH-AND-TUMBLE NEW WORLD OF SESAME SEEDS

ELENI GABRE-MADHIN (VO) There’s a lot of issues in the domestic trading of sesame because the farmers don’t really have a lot of price information. They’re very suspicious of the traders. So they’re really looking for a new mechanism.

NARRATION: SESAME IS GROWN IN SOME OF THE HARSHEST REGIONS OF ETHIOPIA. HUMERA IS A DUSTY OUTPOST ON THE NORTHWEST BORDER WITH SUDAN AND ERITREA, WHERE TEMPERATURES CAN EXCEED 125 DEGREES. IT IS AN UNLIKELY PLACE FOR A MODERN COMMODITIES EXCHANGE, BUT THEY’RE TRYING ANYWAY.

NARRATION: IF BEN EVER WONDERED ABOUT HIS DECISION TO LEAVE THE GOOD LIFE IN HOUSTON THIS MIGHT WELL BE THE DAY AND THE PLACE. IN HUMERA BEN HAS A WAREHOUSE AND NO ONE WHO WILL FILL IT. NO ONE WHO WILL TRADE ON THE ECX.

BEN ASCHENAKI (SUBTITLE – AMHARIC) I work for the ECX. I’m in business development and strategy.

SESAME FARMER (SUBTITLE – AMHARIC) Here the problem is Humera is full of cheaters. They say they are legitimate and then they steal all of your sesame seeds. Because of this a lot of people are hurt.

BEN ASCHENAKI (SUBTITLE – AMHARIC) This happens often?

SESAME FARMER (SUBTITLE – AMHARIC) All the time!

There isn’t a person who hasn’t been cheated. So people are having a lot of problems.

BEN ASCHENAKI (SUBTITLE – AMHARIC) Our solution is if a person wants to sell, he has to bring his seeds to the warehouse and if he wants to buy, he must deposit money in the bank. Saying he’s going to bring it tomorrow doesn’t work.

SESAME FARMER (SUBTITLE – AMHARIC) That’s great.

BEN ASCHENAKI (SUBTITLE – AMHARIC) We came to change all that. If you call us, we’ll answer all of your questions. I just came to introduce myself.

SESAME FARMER (SUBTITLE – AMHARIC) - Very good, thank you

BEN ASCHENAKI (SUBTITLE – AMHARIC) - Thank you very much.

NARRATION: BUT AS BEN AND HIS TEAM ARE TRYING TO TURN THE TIDE IN THEIR FAVOR, THE GROUND IS SHIFTING UNDER THEIR FEET. AN INTERNATIONAL CRISIS OF HISTORIC PROPORTIONS SLAMS INTO THE WORLD'S ECONOMY.

TV ANNOUNCER More misery on the market. Countries around the world are feeling the steep economic downturn.

ELENI GABRE-MADHIN It was a very difficult time. All these things were going on as we were launching our market in April.

NARRATION: OVER THE SUMMER OF 2008, COMMODITY PRICES CRASHED AROUND THE WORLD. IN ETHIOPIA THAT MEANT THAT COFFEE, THE COUNTRY’S BIGGEST EXPORT, WAS HAMMERED.

ABDULLAH BAGERSH The problem was not simply a problem of prices dropping, although that has an impact on the flow of coffee, the problem was the fact that most of our buyers overseas, they were facing liquidity stresses, so the impact was very big.

NARRATION: COFFEE IS TO ETHIOPIA WHAT OIL IS TO SAUDI ARABIA. THE COFFEE CRASH THREATENED THE ENTIRE ECONOMY. AT THE HIGHEST LEVELS OF GOVERNMENT, A QUESTION WAS RAISED: WHAT IF THE ECX – WITH ITS OPEN MARKET, EFFICIENT PRICING TOOK ON COFFEE NOW- NOT YEARS FROM NOW BUT RIGHT NOW – COULD THE DOWNTURN BE AVOIDED?

NARRATION: FOR ELENI, FOR HER TEAM, FOR THE ECX, THIS WAS BOTH AN EXTRAORDINARY OPPORTUNITY AND AN EXTRAORDINARY RISK.

ELENI GABRE-MADHIN We had a nine hour meeting over two days with very senior people in government, very intense. And finally the deputy prime minister looked at me and said, ”If we said, let's have all of it come, can you handle it?” And I looked at him and I said, “Yes.”

AARON BROWN And when you said yes, did you absolutely 100% believe “yes?”

ELENI GABRE-MADHIN I was very scared. I was very scared. It was a very, very frightening moment.

ELENI GABRE-MADHIN I walked out of that meeting and called my management team and I said, we are going to be trading all of Ethiopian coffee, this changes everything. NARRATION : LESS THAN 8 MONTHS OUT FROM ITS LAUNCH, THE ECX STARTED TRADING COFFEE IN THE CAPITAL OF ADDIS ABABA. IT WAS DECEMBER 2008. UNDER THE OLD SYSTEM, COFFEE WAS TRADED IN A GOVERNMENT RUN AUCTION. OVER THE LAST 40 YEARS, THAT AUCTION SYSTEM HAD BEEN MANIPULATED TO SERVE THE INTERESTS OF A SMALL BUT POWERFUL GROUP OF GOVERNMENT-LICENSED EXPORTERS.

ATO ABIYNE (SUBTITLES – ENGLISH) In the previous auction, some of the coffee suppliers talked with some exporters to push the price. They buy the coffee with false price. That was the bad side of the previous auction.

NARRATION: COFFEE MOGULS GOT RICH, BUT ONLY BY PAYING LESS THAN THE COFFEE WAS WORTH. GROWERS MAY HAVE KNOWN THEY WERE BEING CHEATED, but they WERE TRAPPED BY the system.

NARRATION: THIS IS WHAT THE ECX – WHAT AN EFFICENT MARKET – IS DESIGNED TO SOLVE.

NARRATION: EVERY ITEM TRADED ON THE EXCHANGE MUST ACTUALLY BE DEPOSITED IN THEIR WAREHOUSES -- EVERY BAG GRADED, SO THAT IF YOU PAY FOR THE HIGHEST GRADE, YOU KNOW YOU ARE GETTING THE HIGHEST GRADE. BUT IN REALITY THE YOUNG EXCHANGE IS BUCKLING UNDER THE WEIGHT OF THE COFFEE MARKET. THE WAREHOUSES ARE OVERWHELMED, THREATENING TO JAM THE ENTIRE SYSTEM.

ELENI GABRE-MADHIN (SUBTITLE – ENGLISH) We went from having one warehouse to eight times that right now. I mean it’s just crazy. These are all coffee trucks. OK. My gosh. Major, major congestion .Hi, Astatke, how are you?

ASTATKE (SUBTITLE – AMHARIC) I’m good, thank you.

ELENI GABRE-MADHIN (SUBTITLE – AMHARIC) My gosh. It’s completely full. Full! My gosh. This is madness. So, today I’m going to announce that they should pick up their stuff. Right?

FAKADU (SUBTITLE – ENGLISH) Not only announce but strong warning. We need to do that.

ELENI GABRE-MADHIN (VO) Ooh, OK. Coffee is a double edged sword. We need it, it’s the biggest commodity we have, it’s hugely important for the country.

ELENI GABRE-MADHIN (SUBTITLE – AMHARIC) Greetings, how are you all doing? This is a reminder to buyers to make those pickups from the warehouses.

ELENI GABRE-MADHIN (VO) But it’s also extremely political. I mean, everybody has an emotional reaction to coffee. So the stakes are so much higher.

AARON BROWN Um, coffee’s an export item.

ELENI GABRE-MADHIN Yes.

AARON BROWN What does that have to do with feeding people? What does that have to do with the famine, the starvation?

ELENI GABRE-MADHIN Well, I think if you believe that getting rid of hunger is not so much about producing food yourself, because I don’t produce any food and I’m sure you don’t either, but we eat. And that’s because we have entitlement, we have the ability to purchase food and feed our families. So the point is that if these farmers can sell faster, easier, get higher prices, then their incomes go up, they have an incentive to produce more. So that cycle will be set in motion.

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