The Chief Executive Officer of the Ghana Cocoa Board, Joseph Boahen Aidoo, has disclosed that COCOBOD may be “unable to syndicate right now” cocoa syndicated loan agreement due to the scourge of the COVID-19 pandemic.
“We arranged everything until August so we signed in September. This time around, most banks out there have closed. It’s really affecting the industry and you know; cocoa is the backbone of the economy and once cocoa is affected, it means that the entire economy is going to suffer”.
USD 600m syndicated loan
On Tuesday November 12, 2019, the Ghana Cocoa Board, COCOBOD, completed a USD 600 million cocoa syndicated loan agreement with the African Development Bank (AfDB) in Johannesburg, South Africa, for the purchase of cocoa beans from local farmers during the 2019/2020 crop season.
The facility is a syndicated loan with the AfDB and the Credit Suisse Group AG to finance key components of COCOBOD’s productivity enhancement programmes.
The AfDB acted as the mandated lead arranger with a tranche of $250 million, Credit Suisse arranged the commercial tranche of up to $350 million, with the Industrial and Commercial Bank of China (ICBC), acting as a joint underwriter.
USD 140 million from the facility is earmarked to fight CSSVD, $50 million to build more cocoa warehouses, $200 million to promote the domestic processing of cocoa and $10.6 million to establish a database of cocoa farmers in the country.
In addition to this, another $40 million would be invested in irrigation services, $68 million in COCOBOD’s hand pollination initiative and $7.5 million to promote the domestic consumption of cocoa products.
Earlier loan agreements
Earlier in September 2019, the Ghana Cocoa Board (COCOBOD) completed a USD 1.3 billion cocoa syndicated loan agreement for the purchase of cocoa beans from local farmers during the 2019/2020 crop season.
The loan facility is to guarantee the prompt payment of cocoa farmers in Ghana, thus according to the COCOBOD CEO during the signing of the agreement in Paris-France.
The agreement, which is a receivables-backed trade finance facility, was oversubscribed with twenty-four (24) participating banks lead by MUFG Bank Limited, Rabobank, Natixis, Societe General, NedBank Limited and Ghana International Bank.
Reduction in global cocoa prices causes Ghana $1bn deficit
Again, the covid-19 pandemic, is also affecting global prices of cocoa and this has so far caused Ghana USD 1 billion, according to COCOBOD CEO.
Global cocoa prices have dropped to USD 2218.47 per tonne as at April 3, 2020, according to the International Cocoa Organisations (ICCO)
“The buyers have closed their windows so we are not buying. The price of Cocoa has tumbled. Immediately it brings to Ghana a deficit of almost $1 billion. If this thing should continue, paying our farmers will be difficult,” he said in an interaction with the media after receiving some donations from ECOM Ghana.
The situation, he adds, could delay the current syndication process for loan facilities for the 2020/2021 crop season.
Meanwhile, ECOM Ghana, a renowned commodity merchant has donated 1.2 million units of medicated soaps to COCOBOD to be distributed to all cocoa farmers in the country.
The donation forms part of the company’s contribution to the fight against covid-19 pandemic in Ghana.
Country Manager of ECOM Ghana, Muhammadu Muzzammil, who presented the items to COCOBOD in Accra, said the company’s operations is based on the activities of cocoa farmers.
He added that it was imperative to ensure their safety to continue to produce more for sustainable development.