Board Chairman of COCOBOD, Hackman Owusu-Agyemang, has urged local banks and financial institutions to strategically position themselves, so they are able to fully provide the loan COCOBOD needs to purchase cocoa beans in the not too distant future.
Since the 1992/1993 cocoa crop season Ghana’s cocoa sector regulator, has been signing syndicated loan facilities with the participation of a mix of international and local financial institutions.
The latest syndicated loan facility for the 2020/2021 cocoa crop season worth $1.3 billion dollars was facilitated by a total of 28 banks made up of only 4 local and 24 international financial institutions.
Speaking on the matter with Citi Business News, Hackman Owusu- Agyemang bemoaned the current structure which sees a lot of the profit from the loan agreement going to the foreign banks.
“Certainly we should know that this is an expensive exercise and when you do this oversees, the profit goes to them. And I believe the time has come to be able to put together $1.3 or $1.5 billion for an industry that has shown that it can always deliver.”
“So I sincerely believe that we should avoid the cost of doing these syndications, it’s not cheap because you have all manner of fees coming up to add to the interest rate that is given to you. Farmers in North America and other parts of the world like Malaysia don’t go through this,” he added.
COCOBOD secures $1.3 billion syndicated loan; first tranche expected by October 10
Chief Executive Officer of Ghana Cocoa Board, Joseph Boahen Aidoo says the first tranche of the newly signed $1.3 billion syndicated loan facility which will cater for the purchase of cocoa beans for the 2020/2021 crop season should hit their accounts by October 10, 2020.
The agreement for the loan was signed in Accra on September 29, 2020, with the participation of 28 banks made up of 4 local and 24 international financial institutions.
The amount is to help COCOBOD facilitate the procurement of some 900,000 metric tons of cocoa beans.
This means that, effective October 1, 2020, COCOBOD through its Licensed Buying Companies will be paying GHS660 for every 64kg bag of cocoa from Ghanaian farmers in line with the increase in the farmgate price announced by government.
While addressing the stakeholders at the signing ceremony, Joseph Boahen Aidoo, assured that the proceeds from the loan will be used for the intended purpose to ensure all stakeholders in the cocoa value chain in Ghana especially the farmers are better off.
“A total of USD1.3 billion at a competitive interest rate plus libor of 1.75% Pre-Export Trade Finance Facility has been signed to finance cocoa purchases for the 2020/2021 crop season. The loan which is repayable in seven (7) calendar months is projected to help purchase about 900,000 metric tonnes of cocoa for the season.”
“I wish to also assure all stakeholders that the loan will be used solely for the purpose for which it has been contracted. In addition, I’d like to also assure our supportive funding institutions that, as we have done over the years, we will repay the loan on schedule,” he assured.
While acknowledging the challenging times, Minister of Food and Agriculture, Dr. Owusu Afriyie Akoto who addressed the gathering at the signing ceremony via zoom, added that the signing of the current deal goes to show the resolute confidence of relevant stakeholders in the prospects of Ghana’s cocoa sector.
Lead Financial Institutions involved in the deal
Initial Mandated Lead Arrangers of the new loan include;
- ABN AMRO BANK NIV
- BANK OF CHINA LIMITED LONDON BRANCH
- COOPERATIVE RABOBANK UA
- DZ BANK AG DEUTSCHE ZENTRAL-ZENOSSENSCHA FTS BANK, FRANKFURT AM MAIN.
- GHANA INTERNATIONAL BANK PLC
- INDUSTRIAL AND COMMERCIAL BANK OF CHINA LIMITED, LONDON BRANCH
- MUFG BANK LIMITED
- SOCIETE GENERALE
- STANDARD CHARTED BANK
The four local banks that are participating in the deal include: Ecobank Ghana Limited, Société Générale Ghana Limited, ABSA Ghana Limited and Stanbic Bank Ghana Limited.