After 32 years of contracting a syndicated loan annually to purchase cocoa from farmers in the country, the Ghana Cocoa Board (COCOBOD) says beginning from the 2024/2025 cocoa season, it will finance the purchase of cocoa beans and its operations domestically.
Over the past three decades, COCOBOD had been securing a syndicated loan each year, usually around August or September.
Going for syndicated loans to buy cocoa from the farmers at a fixed price and protect them from changes in global prices meant that COCOBOD needed amounts too large to attract the willingness of a single entity to lend to a single borrower.
What that implied was that COCOBOD didn't have enough of its own funds to undertake that operation.
Some of us had been worrying about the COCOBOD's annual cap-in-hand exercise, wondering why that should be so for an agency of a country that was the world's leading producer of cocoa between 1911 - 1976, contributing between 30-40 of the global total output, but now second with cocoa still contributing a chunk part of the country's foreign exchange earnings.
Definitely something was wrong somewhere that needed to be addressed.
For instance, in September 2020, the COCOBOD signed an agreement for a US$1.3 billion syndicated loan facility for the 2020/2021 cocoa crop, yet in 2021 it recorded a loss of GH¢2 billion, which was said to be the result of a strategic decision to maintain farmer payments despite the organisation's financial performance.
Today, COCOBOD claims it is financially healthy, citing over GH¢2 billion in profit it made in 2022/2023.
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Taking into consideration the current financial standing of COCOBOD, we wish to agree that it can wean itself off syndicated loans, beginning from the 2024/2025 cocoa season as it has announced.
However, the Ghanaian Times is once again worried about something important for that journey.
Why did the Chief Executive Officer (CEO) of the COCOBOD, Joseph Boahen Aidoo, refuse to answer at the news conference in Accra on Tuesday the question as to how cocoa purchases could be funded without the syndicated loan.
Meanwhile the CEO had made a heart-warming statement that "We are looking for US$1.5 billion this crop season and looking at the interest rates last year, which were over eight per cent, plus the cost, it means that we can save more than US$150 million by the decision not to go offshore."
The Ghanaian Times thinks his unwillingness to answer that question and that the source of funding could only be given later can cause others to speculate in certain ways.
Can we say, for instance, that the COCOBOD is not far advanced in its readiness for the change because as indicated in this piece, in the case of the syndicate loans, it always went for it in August or September, meaning it finished the preparation earlier before the actual process for the loan began.
If we are in August and securing the funding locally, what prevents the COCOBOD to give, at least, an inkling of the source(s) of the domestic funding of cocoa purchase?
Whatever the case is, the Ghanaian Times prays that COCOBOD would succeed in its efforts to wean itself off contracting syndicated loans for cocoa purchases, for the country to enjoy the related benefits.
