The Ghana Cocoa Board (COCOBOD) will on 10th October 2020 receive the first tranche of the $1.3 billion syndicated loan facility secured for cocoa purchases in the 2020/21 crop season.
Officials of COCOBOD and the lead arrangers of the credit facility Tuesday, September 29, signed the agreement in Accra and Paris simultaneously over a virtual ceremony, the first ever in the Board’s 28-year history of contracting the cocoa syndicated loan.
A consortium of twenty-eight (28) financial institutions, including four local Ghanaian banks namely Absa, Ecobank, SG Ghana and Stanbic, pooled the facility purposed mainly to finance the purchase of an estimated 900,000 metric tonnes of cocoa beans in the crop season opening from October 1.
The participating banks include ABN-Amro, MUFG, Natixis, DZ Bank, Ghana International Bank, ICBC, Societe General, NedBank, Standard Chartered and Bank of China.
Part of the $1.3 billion syndicated loan has also been earmarked for the purchase of fertilizer, finance pests and disease control and cocoa roads construction, among other operational activities.
The pre-export trade finance facility contracted at an undisclosed interest rate plus libor of 1.75%is is repayable in seven (7) calendar months.
A $6.5 million Stamp Duty on the receivables-backed trade facility guaranteed by the government of Ghana was waived by parliament when it approved the deal early on in August.
Repayment of the principal is to be effected by seven equal instalments beginning February 2021 and ending August 2021.
Yoriko Noguchi of MUFG, one of the 28-member consortium, speaking on behalf of the lead arrangers and bookrunners of the $1.3 billion syndicated loan, called this year’s deal as “special” as the prevailing COVID19 pandemic had made a physical signing ceremony impossible.
She said despite the difficult economic conditions faced by the markets due to the pandemic, the COCOBOD facility was oversubscribed up to $1.5 billion attributing it to the Ghana cocoa regulator’s “true professionalism and pragmatism” demonstrated over the years.
Mr Joseph Boahen Aidoo, Chief Executive of COCOBOD, recounted with pride how Ghana has never defaulted on the repayment schedule since the financing arrangement was first instituted almost three decades ago.
“We have also returned this trust by ensuring that we never defaulted in repaying the loans since the 1992/1993 crop season when the first one was signed. In fact, on several occasions, the loan was repaid ahead of schedule. The 2019/2020 syndicated loan, for instance, was re-paid two months ahead of schedule”, he noted.
Mr Aidoo explained the syndicated loan facility as crucial because it enabled the Board to pay cocoa farmers upfront at the offtake centres, avoiding indebtedness to the already poor cocoa producers.
The Cocobod boss said, that in the government’s quest to improve the income and livelihood of farmers, the Living Income Differential (LID) price mechanism has been introduced to add as much as $400 per tonne to the income of cocoa farmers in Ghana and Ivory Coast.
The LID, incorporated into Ghana’s new cocoa producer price, has increased the earning per bag by an unprecedented 28 percent beginning 2020/21 crop season.
“Thus Ghanaian farmers are going to take home an amount of Ghc660 per bag of 64kg premium quality cocoa sold”, Mr Aidoo expatiated.
The Minister of Food and Agriculture, Dr Owusu Afriyie Akoto, joining the ceremony via Zoom assured the government is committed to adopting policies and programmes that will make cocoa farmers experience the full benefit of their sacrifices.
He said the government will continue to pursue such incoming enhancing interventions as the Productivity Enhancement Programmes in addition to 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.
These he believed would ensure a sustainable cocoa economy and improved socio-economic livelihood for the country’s cherished cocoa farmers.
Present at the novel virtual syndicated loan signing ceremony were the Board Chairman of Ghana Cocoa Board, Mr Hackman Owusu Agyemang and the Finance Committee Chairman of Ghana’s Parliament, Dr Mark Assibey-Yeboah, among other key officials.
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