Parliament approves US$1.3bn loan to finance purchase of cocoa for new season

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Parliament has approved US$ 1.3 billion loan facility from a consortium of banks and financial institutions to finance the purchase of cocoa for the 2020/21 crop season by the Ghana Cocoa Board (Cocobod).

The loan would be used to purchase an estimated 900,000 metric tonnes of cocoa beans from farmers through theLicensed Buying Companies (LBCs) and to also finance other operations of the Board for the cocoa season. Part of it will also be used in certain operational areas including fertilizer distribution and application, cocoa diseases and pests’ control, cocoa roads, among others.

The House also approved a waiver of Stamp Duty amounting to US$6.5 million on the receivables-backed trade facility with government as guarantor.

Presenting the Finance Committee’s report to the house prior to the approval, Chairman of the Committee, Dr. Mark Assibey-Yeboah highlighted the need for substantial financial resources to enable COCOBOD purchase cocoa beans, which will consequently increase levels of production.

He said the Committee noted the cocoa industry, which employs an estimated two million people along the supply chain, plays a crucial role in the economic development of the country and remains a major source of the country’s foreign exchange earnings and contributes significantly to the Gross Domestic Product (GDP), hence, the need for such support to the sector.

Repayment of the principal is to be effected by seven equal instalments beginning February 2021 and ending August 2021, Dr. Assibey-Yeboah noted.

In an interview with the media following the approval, MP for Ho Central, Benjamin Komla Kpodo, expressed worry at the rate of  borrowing to facilitate cocoa buying every year, saying, it is about time managers of COCOBOD devised innovative ways to generate funds internationally for the purchase to reduce borrowing and financing cost.

“Over the years we are borrowing. If we are more prudent in the management of the cocoa sector, we should be saving money gradually towards relying on ourselves to purchase cocoa. So I feel that this US$1.3 billion is too high as an expenditure, from the revenue that we obtain from cocoa.

Meanwhile, last year, the deficit incurred by COCOBOD was GH¢1.9 billion and this year, they are estimating that they will have a deficit of roughly GH¢260 million.

These are the areas that we can manage and reduce the expenditure so that progressively, we can save money and in future, we wouldn’t have to go and borrow at such high interest cost before we can buy cocoa,” Mr. Kpodo said.

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