Cocobod is planning to expend a combined US$340million on the promotion of domestic processing and rehabilitation of Cocoa Swollen Shoot Virus Disease (CSSVD) affected farms from the US$600m loan facility, a parliamentary report has revealed.
The amount represents 56.67percent of the total US$600m loan facility expected from the African Development Bank.
According to a report of the Finance Committee on the long term loan facility agreement between government (represented by the Finance Ministry,Ghana Cocoa Board) and the African Development Bank for an amount of up to US$600million for Cocoa Productivity Enhancement Programmes by the Ghana Cocoa Board, it will ensure farm productivity enhancement and control of Cocoa Swollen Shoot Virus Disease (CSSVD).
Other components of the interventions to be financed with the loan include: hand pollination at a cost of US$68m, farm irrigation at a cost of US$40.7m, rehabilitation (CSSVD) at a cost of US$140m, rehabilitation (moribund farms at a cost of US$82m, warehouse capacity at a cost of US$50m, farmer database is expected to cost US$10m, and the promotion of consumption at a cost of US$7.5m.
As part of measures to ensure the sustainability of the cocoa sector, the Ghana Cocoa Board and its counterpart in Cote d’Ivoire Le Consiel du Café-Cacao agreed a strategic framework for mitigating the harsh effects of declining international prices, building resilient and robust cocoa sectors capable of rendering appreciable and sustainable benefits to farmers and the national economies of the two countries.
The adopted strategies require immediate investment in critical areas of the cocoa sector to ensure sustainability.
These areas of investment include, Farm productivity enhancement and control of Cocoa Swollen Shoot Virus Disease (CSSVD), Increased Storage and Warehousing capacities as part of export control measures, Promotion of processing and consumption to increase demand thereby positively affecting prices.
Establishment of African Cocoa Exchange to trade cocoa, given that 60percent of annual global output is produced by Ghana and Cote d’Ivoire
Establishment of a Stabilisation Fund to cushion the industry against unexpected declines in world price.
In view of the above, a joint request for US$1.2billion was submitted to the African Development Bank,of which Ghana’s component of US$600million was appraised by the Bank for financing various Productivity Enhancement Programme.
The Ghana Cocoa Board (COCOBOD) is however required by the Stamp Duty Act, 2005(Act 689) to pay a zero-point-five percent (0.5) of the facility amount as Stamp Duty and it is in this regard that Parliamentary approval was sought for the waiver of the payment of the Stamp Duty which amounts to the Ghana Cedi equivalent of three million United States Dollars (US$3m)
The Trade Finance Facility is to enable COCOBOD to obtain funds from the African Development Bank to finance Cocoa Productivity Enhancement Programmes with the aim of increasing Ghana’s national output to an annual average of one million tonnes whiles also doubling average productivity from the current 450kg/ha to about 1200kg/ha.
The Committee report also noted that COCOBOD has drawn up strategies to improve productivity per hectare of cocoa farms, increase processing and increase consumption locally and on the international market.
The Minority National Democratic Congress (NDC) however raised red flags against the loan facility and cautioned the lenders to subject the loan agreement to further probe to prevent its misapplication,
Ranking member on Finance, Cassiel Ato Forson, indicated his side will ensure the agreement is scrutinized.
“We are by this medium cautioning the lenders that this loan is subject to proper scrutiny in future, and we as minority, we are going to dig into this matter because clearly, everything points to the fact that this loan is going to be misapplied” he told B&FT in interview at Parliament House.
They also alleged that the agreement is meant to finance the 2020 electioneering campaign of the government.
The financial structure of the loan according to him is an outlier which is tied to projects whose draw down is only two-months instead of the normal staggering of the loan over the project period.
The Ajumako-Enyan Member of Parliament described the proposed utilization of the loan which are bloated in his estimation as disturbing.