The Ghana Cocoa Board (COCOBOD) has secured US$1.3 billion from a consortium of 21 banks to finance cocoa production and purchases in the 2018/19 cocoa season.
The loan, led by ABN AMRO, the Bank of China, the UK branch of the Industrial and Commercial Bank of China (ICBC), Standard Chartered Bank and the Ghana International Bank, will attract an interest rate of 0.60 per cent plus Libor rate, which is the benchmark rate that some of the world’s leading banks charge one another for short-term loans.
The Chief Executive Officer (CEO) of the COCOBOD, Mr Joseph Boahen Aidoo, signed on behalf of the COCOBOD, while representatives of the participating banks initialed for their respective banks.
The signing ceremony in Amsterdam in The Netherlands yesterday was witnessed by the Chairman of the Parliamentary Select Committee on Finance, Dr Mark Assibey-Yeboah; the Chairman of the Parliamentary Select Committee on Food and Agriculture, Mr Kwame Asafo Agyei, and Ghana’s Ambassador to the UK, Papa Owusu Ankomah.
Addressing the media via telephone after the signing agreement, Mr Joseph Boahen Aidoo said the first instalment of US$650 million, which is half the amount, was expected to hit the account of the Bank of Ghana (BoG) by October 4, 2018.
He said the second instalment of US$650 million would arrive by the end of November this year.
Mr Aidoo said the facility was oversubscribed by more than US$500 million but COCOBOD decided to opt for just US$1.3 billion which, he believed, would be sufficient for the purchase of cocoa beans and other related costs for the next crop season.
He said COCOBOD, however, had the option to draw an extra US$250 million during the light crop season.
Prompt payment to farmers
The CEO explained that the loan would afford the board the opportunity to pay farmers promptly.
That, he said, would motivate the farmers to work hard to ensure that COCOBOD met its production target for the season.
Touching on why COCOBOD had to always borrow money to purchase cocoa beans from farmers, Mr Aidoo said it would be very difficult to raise such an amount of money in the country at the moment.
“We have to pay the farmers promptly too and cannot buy their beans on credit, so the only way out is to go for the loan. Even with the syndicated banks, it has to take 21 of them to raise such an amount,” he added.
Touching on the participation of local banks in the facility, he said three local banks, comprising Ecobank Ghana, Barclays Bank and Societe Generale Ghana participated in raising the money.
Speaking at the signing ceremony, the CEO stated that the facility was of tremendous importance to the country and commended the lead arrangers for the good work that they had done.
He said the appending of signatures by the banks was not just to seal the deal but also an indication of their confidence in the cocoa industry and, by extension, the entire economy of Ghana.
“We are grateful for the confidence reposed in us and we want to assure you that it is not misplaced. Over the past 25 years, we have consistently maintained a reputation of honouring repayment of year after year of syndicated loans without a single default,” he noted.
Challenges in the sector
Mr Aidoo pointed out that despite the enviable record of COCOBOD repaying its loans without a single default, there still remained some challenges in the cocoa sector the board had to grapple with.
He cited perennial pest diseases, such as the cocoa swollen shot disease, volatility of and fall in cocoa prices, poor road infrastructure, linking up producing communities with markets, service centres and warehouses as some of the fundamental challenges contriving against the industry.
Reversing declining trend
The CEO indicated that COCOBOD had been able to reverse the declining trend in cocoa production and was on the trajectory of increasing production.
Mr Aidoo said the sustained upturn in production levels had been possible due to productivity enhancement programmes that COCOBOD implemented, including the hand pollination exercise and mass spraying.