GHANA – The Ghana Cocoa Board (COCOBOD) has secured US$1.3 billion from a consortium of 24 International French banks to aid in financing the purchase of cocoa in the 2019/2020 crop season.
Sources at COCOBOB say the Board secured an extra US$200 million from some of the financing banks which is above the US$1.3 billion under the main syndication for which it also obtained legislative approval.
The financing was led by Natixis Bank, MUFG Bank Limited, Rabobank Group, Nedbank, Societe Generale and the Ghana International Bank.
The Chief Executive Officer of COCOBOD, Mr Joseph Boahen Aidoo, signed on behalf of the COCOBOD while representatives of the participating banks initialled for their respective banks.
The 2019/2020 syndicated loan would be drawn down in three tranches. The first installment of $650 million is expected to hit the account of the Bank of Ghana by October with the second installment of $450 million arriving in November.
The balance could comprise the third tranche which is usually used to finance purchases during the light crop season of which produce is used by local processing firms.
Joseph Boahen Aidoo, in a live telecast from France, revealed the syndication loan will be financed in a 7-month interval from February to August 2020.
It will attract an interest rate of .55 basis points plus libro rate. This is the benchmark rate charged by some of the world’s leading banks for short-term loans.
COCOBOD plans to use the funds to finance the purchases of the 950 000 tonnes of cocoa beans it expects will be produced during the impending crop season.
Speaking at the signing ceremony, Mr Boahen Aidoo said the facility would guarantee that Ghanaian cocoa farmers were promptly and fully paid for their labour.
He commended the 24 participating banks, stating that the impact of the syndicated loan on the economy was significant.
One of the immediate impacts the deal will have on the economy is that it will improve Bank of Ghana’s reverses, a situation that could give investors and currency traders some assurance about the central bank’s ability to defend the local currency.
The payment to the farmers and licensed buying companies will also improve liquidity in the banking system. The inflows of these funds will also help stabilise the cedi in the last quarter of this year.
Mr Boahen Aidoo also pointed out that the confidence the international financing system had in the Ghanaian cocoa sector stemmed from the ability of COCOBOD to fulfil its obligation with regard to the payment of the loans without default.
“It must be put on record that the payment of the 2016/17 facility was scheduled to be completed by the end of August 2017, however COCOBOD was able to finish repayment by the end of July 2017.’’
“Similarly, the 2017/18 facility was fully repaid in July 2019 ahead of the scheduled date. I am, therefore, not surprised that the 2019/20 facility was over-subscribed,” he explained.