Johnson Akuamoah Asiedu, the Auditor-General, in his latest report has raised some pertinent questions about Ghana Cocoa Board’s (COCOBOD) increasing debt burden.
The debt accumulation emanates from short-term cocoa loans of about GH¢8.49billion; BoG 10-year loan of almost GH¢1.4billion; medium-term loans in a total of GH¢1.28 billion; as well as an AfDB loan of GH¢1.14billion and BADEA Loan Account of GH¢174,295.
What is even more irksome, according to the Auditor-General, is the fact that the Board did not even provide any effective plan on how to reduce its debt burden into the future.
The AG’s department noted that the debt burden has resulted in an increased finance cost over the years; from GH¢1.25billion in the 2018/2019 financial year to GH¢1.57billion in the 2019/2020 financial year.
If not managed effectively, this state of affairs could lead to crippling the cocoa industry.
Consequently, the AG has urged management to deploy and implement effective plans and strategies that will lead to a reduction of the Board’s debt burden within the medium- to long-term.
Even though in its response management of COCOBOD indicated that it is implementing tighter budgetary controls to ensure that debt is not accumulated, and adopted strategies like issuing a bond of up to US$3billion to refinance the relatively expensive cocoa bills, we believe the AG’s concerns are forthright and in the right direction.
Cocoa contributes significantly to the country’s total foreign exchange earnings, second only to mineral exports – and to see it in a state of perpetual debt is a worrying spectacle.
How can the nation avert such persistent debts from one of its most prized income earners? What can COCOBOD do differently to ensure this worrying situation is curbed?
In the 2020 financial year, COCOBOD recorded a loss of GH¢426million as compared with a loss of GH¢320 million registered in 2019. This represents a 33 percent decrease in the Board’s financial performance over the period.
The Board has debts totalling GH¢12.3billion in its records as of end of the 2019/2020 financial year.
COCOBOD, via its marketing company Cocoa Marketing Company, obtains cheap US dollar loans on international markets by using cocoa contracts as collateral.
The global chocolate industry is worth over US$150billion and West Africa alone supplies 70% of the cocoa beans, yet receives less than US$6billion.