The Ghana Cocoa Board (COCOBOD) has secured US$1.3 billion from a consortium of 24 banks to finance cocoa purchases in the 2019/20 cocoa season.
The syndication, led by Natixis Bank, MUFG Bank Limited, Rabobank Group, Nedbank, Societe Generale and the Ghana International Bank, will attract an interest rate of .055 per cent plus libor rate, which is the benchmark rate that some of the world’s leading banks charge one another for short-term loans.
The Chief Executive Officer of COCOBOD, Mr Joseph Boahen Aidoo, signed on behalf of the COCOBOD, while representatives of the participating banks initialed for their respective banks.
The first installment of $650 million is expected to hit the account of the Bank of Ghana by October, with the second installment of $650 million arriving in November.
The facility was over-subscribed by $700 million.
The signing ceremony in Paris, France, was witnessed by the Minister of Monitoring and Evaluation, Dr Anthony Akoto Osei; the Chairman of the Finance Committee in Parliament, Dr Mark Assibey Yeboah, and the Chairman of the Board of COCOBOD, Mr Hackman Owusu-Agyemang.
Speaking at the signing ceremony, which was streamed live at the COCOBOD premises in Ghana, Mr Boahen Aidoo said the facility would guarantee that Ghanaian cocoa farmers were promptly and fully paid for their labour.
He commended the 24 participating banks, stating that the impact of the syndicated loan on the economy was significant.
“It contributes to the sustenance of the incomes of over 800 cocoa families and the empowerment of their livelihoods. Participating banks should, therefore, see themselves as making a contribution towards improving the economy and thereby supporting the government,” he noted.
Support to cocoa communities
The CEO also pointed out that in the last couple of years, it had become a tradition for the consortium of banks to support the hardworking farmers in the form of projects to improve their livelihoods and that of the cocoa communities.
“During the 2011/12 syndication year, an anesthetic machine and a borehole were provided for the Tetteh Quarshie Memorial Hospital in Mampong and before the signing of the 2012/13 facility, the banks, in consultation with COCOBOD, decided to support the Ofoase cocoa community with the construction of a six-unit classroom block which cost about $67,500 dollars.”
“Since the commissioning of the school block in September 2013, smiles have been brought on the faces of the beneficiary children who were hitherto attending classes in dilapidated classrooms.”
He said COCOBOD had, however, observed that those commendable gestures had been missing lately and, therefore, urged the consortium of banks to help keep the tradition alive.
Confidence in cocoa industry
Mr Boahen Aidoo also pointed out that the confidence the international financing system had in the Ghanaian cocoa sector stemmed from the ability of COCOBOD to fulfil its obligation with regard to the payment of the loans without default.
“It must be put on record that the payment of the 2016/17 facility was scheduled to be completed by the end of August 2017, however COCOBOD was able to finish repayment by the end of July 2017. Similarly, the 2017/18 facility was fully repaid in July 2019 ahead of the scheduled date. I am, therefore, not surprised that the 2019/20 facility was over-subscribed,” he explained.
He said COCOBOD’s ability to repay the loans on time also reflected the resilience of the country’s cocoa farmers in adhering to the proven production and quality standards which Ghana’s cocoa sector was well known for.
“It is our objective that the high reputation we have gained on the international financial market over the past years would be maintained,” he stated.
Boahen Aidoo, CEO of COCOBOD with representatives of participating banks after signing the agreement