GHANA – The Ghana Cocoa Board (Cocobod), the cocoa sector regulator, has refute recourse to financing from cocoa traders and opt for a mobilization of funds on the domestic level.
This will be unprecedented move in 32 years. Cocobod has been financing its purchases of beans from producers every year since 1992/1993 through a syndicated loan.
The regulator was pursuing US$500 million from multinationals like Olam, however the after discussions for US$1.5 billion initially envisaged to be contracted with the banks stalled.
The funds from multinationals were to act as a temporary solution while Ghana continues discussions with banks ahead of the new season starting in October, according to sources close to the matter.
“We are not taking funds from cocoa traders. The money will come locally. We will self-finance. In the worst case, we will make a cocktail of self-financing and national financing,” explained Joseph Aidoo, Cocobod managing director.
The manager, who adds that the new process would save $150 million in interest paid to lenders.
Typically, Cocobod secures the syndicated loan in September, right before the season kicks off. However, last year’s debt restructuring complicated negotiations, pushing the loan approval to December.
This delay forced Ghana to borrow US$400 million from cocoa traders in November and an additional US$200 million in March after lenders withheld the final US$800 million tranche.
The board relies on this facility to cover costs for seedlings, chemicals, fertilizers, and bean purchases from farmers, while the foreign exchange supports the central bank in stabilizing the national currency.
In the new move, some observers indicate that Cocobod could draw on its own reserves to finance part of its various operations.
It should be noted that after 6 consecutive years in the red, the regulator made a profit of 2.3 billion cedis (US$148 million) in 2022/2023.
Overall, the regulator’s upcoming announcements will be closely scrutinized by analysts on the global cocoa market, especially since the country has just revised its production forecasts downward, which is likely to maintain price volatility.
Authorities are now anticipating 650,000 tonnes of cocoa for the new 2024/2025 campaign, 20% less than the initial forecast of 810,000 tonnes due to the lack of rain.
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