Parliament approves US$1.3 billion cocoa syndicated loan

Parliament has approved a US$1.3 billion loan facility from a consortium of banks and financial institutions to finance the purchase of cocoa for the 2020/21 crop season by the Ghana Cocoa Board (COCOBOD).

Part of the loan will also be used in certain operational areas, including fertiliser distribution and application, cocoa disease and pest control, among others.

Parliament also approved a request for a waiver of stamp duty amounting to US$6.5 million on the receivables-backed trade finance facility, with the government as guarantor.

Mark Assibey-Yeboah, chairman of the finance committee of Parliament, said the loan will be used to purchase an estimated 900,000 metric tonnes of cocoa beans from farmers through licensed buying companies (LBCs) and to finance other operations of the board for the new crop season.

He said there is a need for substantial financial resources to enable COCOBOD to purchase cocoa beans in bulk, which will consequently increase levels of production.

Dr Assibey-Yeboah said the finance committee acknowledges that the cocoa industry, which employs an estimated two million people along the supply chain, plays a crucial role in Ghana’s economic development. It remains a major source of foreign exchange earnings for Ghana and contributes significantly to the country’s gross domestic product, hence the need for such support to the sector.

He said repayment of the principal is to be effected in seven equal instalments, beginning February 2021.

Reduce borrowing

However, the MP for Ho Central, Benjamin Komla Kpodo, expressed anxiety about the rate of borrowing to facilitate the buying of cocoa every year.

Kpodo said it is about time managers of COCOBOD devised innovative ways to generate funds internationally for the purchase of cocoa to reduce borrowing and financial costs.

“Over the years we [have been] borrowing, if we [had been] more prudent in the management of the cocoa sector, we should be saving money gradually towards relying on ourselves to purchase cocoa,” theMP  said. “So I feel that this US$1.3 billion is too high as an expenditure, from the revenue that we obtain from cocoa.

“Meanwhile, last year, the deficit incurred by COCOBOD was GHC1.954 billion and this year, they are estimating a deficit of about GHC260 million.

“These are the areas that we can manage and reduce the expenditure so that, progressively, we can save money, and in future, we wouldn’t have to go and borrow at such high interest cost before we can buy cocoa.”

Cocoa growth initiatives

Meanwhile, the Minister of Agriculture, Owusu Afriyie Akoto, said that the government is keen to expand Ghana’s cocoa sector, mainly through tailor-made initiatives for the cocoa community.  

“To curtail these challenges,” Dr Akoto Afriyie said, “we instituted some productivity enhancement programmes (PEPs) and other policy interventions. Among these are: relaunching of the Cocoa Diseases and Pest Control Programme (CODAPEC), enhancement of the national cocoa rehabilitation programme with new incentives to landowners and farmhands, the introduction of a national hand pollination and mass pruning programmr, piloting of a cocoa farm irrigation programme, launching of a national cocoa consumption campaign to make cocoa a household food in Ghana, among others.

“Apart from the LID [the living income differential, the new guaranteed, built-in subsidy to ensure that cocoa farmers stay above the poverty line] which will be fully implemented in October 2020, the benefits of all the other interventions are already being enjoyed by cocoa farmers across the country,” he said.

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