Ghana Cocoa Board (COCOBOD) has finalised a $1.3 billion cocoa syndicated loan deal for the 2018/19 crop season, of which the first tranche is expected to hit Bank of Ghana’s account in two weeks.
COCOBOD CEO Joseph Boahen Aidoo signed the deal with 21 banks in Amsterdam on Thursday, 20 September, which will effectively ensure that adequate funds are made available to the Licensed Buying Companies (LBCs) to pay cocoa farmers for produce bought during the crop season in question.
Mr. Aidoo said the release of about $650 million will help in paying for cocoa within the season, adding at the signing ceremony: “This will motivate the farmers to work hard to ensure our production targets are met”.
“By appending your signature to this facility”, Mr. Aidoo said, “You are not only sealing the deal, but you are also indicating your confidence in the cocoa industry and, by extension, the entire economy of Ghana.
“We are indeed encouraged by this confidence reposed in us and want to assure you that it is not misplaced. Over the past 25 years, we have consistently maintained that exquisite reputation of honouring repayment of year-after-year syndicated loan without a single default. This record in the financial market is remarkable.
“But whilst painting such enviable credentials, we must not be deceived that all is rosy in the cocoa industry back home. Perennial pests and diseases, the ubiquitous Cocoa Swollen Shoot Virus Disease, volatility and fall of cocoa prices, climate change and poor road infrastructure linking our producing communities to markets and service centers and to the warehouses and the ports are fundamental challenges that contrive against the industry.
“Within the past dozen and half months, we have been able to reverse the declining trend of cocoa production in Ghana from 778,000 metric tonnes to 968,000 metric tonnes, and sustained the upturn because of the productivity enhancement programmes (PEPs – i.e. hand pollination and mass pruning) which COCOBOD introduced along with our conventional CODAPEC and HI-TECH measures.”
“Even though the annual facility comes in handy to facilitate these PEPs and payment to cocoa farmers, hardly can it be relied upon for addressing the fundamental challenges. COCOBOD, for instance, has programmed to undertake irrigation on cocoa farms, rehabilitation of diseased and moribund farms, expansion of warehouse capacity, improvement of the conditions of roads that link cocoa communities and promotion of domestic consumption of cocoa. These are largely capital-base projects which require medium to long term financing and not annual facility. The imperative is that so long as these fundamental challenges remain, the full and real measure of the annual facility cannot also be realised.
“It was against the foregoing backdrop that we made a call for medium to long term financing. I am happy to note that some of our friends in the international financial sector have responded positively. We urge all others who may not have been aware of this call to join this laudable endeavour. In essence, the annual facility must be complemented with medium to long term facility if the former were to bring real and meaningful impact onto the cocoa industry in Ghana.
“Let me take this opportunity to pay tribute to our gallant cocoa farmers who have, through their toils, enabled us to achieve this enviable record in the past 25 years. Their resilience in the face of all the challenges has ensured that we continue to produce enough cocoa of premium quality to fulfil our contractual obligations to our trading partners. If you and I are here today, then it is because of our cherished cocoa farmers. Let us together, therefore, assist them to make the industry a sustainable one,” Mr. Aidoo stated.
“We wish to assure all the Banks participating in this syndication that Ghana Cocoa Board is alive to its obligations under this loan agreement and will fully discharge them as we have always done,” Mr. Aidoo said.