For the first time in 28 years, the Ghana Cocoa Board (COCOBOD) has signed a US$1.3 billion syndicated loan through a virtual platform with lenders and lead arrangers abroad.
The meeting which was organized via a video conferencing due to the COVID-19 pandemic saw 28 banks participate in this year’s syndication. The funds, which will be used to purchase cocoa beans for the 2020/2021 crop season has an interest rate of 1.75 percent plus libor.
The loan must be paid back in seven months and is expected to help COCOBOD purchase about 900,000 metric tonnes of cocoa for the season. Overall, a total of 28 banks made up of four local banks and 24 international financial institutions participated in the syndication.
The four local banks are Ecobank Ghana limited, Societe General Ghana Limited, Absa Ghana Limited and Stanbic Bank Ghana Limited.
The lead arrangers for the loan include ABN Amro Bank, Bank of China-London Branch, Cooperative Rabobank UA, DZ Bank AG Deutsche, and Ghana International Bank Plc. The rest are Industrial and Commercial Bank of China, MUFG Bank, Natixis, Societe Generale and Standard Chartered Bank.
“I wish to assure all stakeholders that the loan will be used solely for the purpose for which it has been contracted,” Chief Executive of COCOBOD, Joseph Boahen Aidoo said, adding that the first tranche of the money will hit the account of the Bank of Ghana by October, few days after the signing.
Even though Ghana has been struggling in recent times to reach one million metric tonnes production of cocoa beans, Mr. Aidoo was optimistic that the measures put in place by government will motivate farmers to increase production to help meet the target.
He mentioned, for example, that the Living Income Deferential which has added US$400 to cocoa prices, as well as the recent 28% increase in farm-gate cocoa prices are all significant steps that could help Ghana return to the glory days of producing one million metric tonnes of cocoa.
“In addition to the remunerative producer prices, we will successfully implement the Productivity Enhancement Programmes and other interventions such as the National Cocoa Rehabilitation Programme, Hand Pollination Programme, Mass Pruning Exercise, Mass Spraying Exercise, Free Seedlings Distribution, Subsidized Fertilizer Distribution and the Cocoa Roads Improvement Initiative, to ensure a sustainable cocoa economy and improved socio-economic livelihood for our cherished farmers,” he stressed.
On his part Board Chairman of COCOBOD, Hackman Owusu Agyemang stated that the oversubscription by investors to the tune of US$1.5 billion show investor confidence in Ghana’s cocoa sector.
He however called for improved measures that will encourage more local banks to participate in future syndication to financially strengthen their operations. “We should get to a time when we can do this ourselves and not always go out for a loan,” he said.
Recent increase in farmgate prices
President Akufo-Addo, on Thursday (September 24,2020) announced a new producer price of GH¢10, 560 per metric tonne for the 2020/2021 crop season. This translates to GH¢660 per bag of cocoa– representing a 28 percent increase in prices. This is expected to take effect from October 1, 2020.
Nana Addo noted that despite unstable cocoa price on the world cocoa market, government will continue to prioritize cocoa farmers in determining the price.