COCOBOD Secures $1.8bn For Cocoa Purchases

Dr. Stephen Opuni (2 nd  left) signing the agreement

The Ghana Cocoa Board (COCOBOD) has signed a loan agreement with a consortium of international financial institutions for an amount of $1.8 billion to purchase cocoa beans for the 2015/ 2016 crop season.

The fully underwritten loan facility was arranged by Barclays Bank Plc, Commerzbank, Aktiengesellschaft, Deutsche Bank AG, Natixis, Standard Bank Group of South Africa and Sumitomo-Mitsui Banking Corporation.

The $1.8 billion loan, which was secured at 1.19 percent interest rate, would enable the company to purchase 850,000 metric tonnes of cocoa for the 2015/ 2016 season.

The loan was oversubscribed by 44 percent.
Although the board budgeted for and got approval from Parliament to raise $1.8 billion to fund cocoa purchases, the banks offered to lend it $2.6 billion,

The Chief Executive Officer of (COCOBOD), Dr. Stephen Opuni led the Ghanaian delegation to Paris, France to sign the loan agreement yesterday.

Trade financing facility
This year’s syndicated loan is $100 million higher than the $1.7 billion that was raised in the 2014/15 cocoa season.

COCOBOD, which regulates Ghana’s premium cocoa sector, has since 1993 resorted to loan syndication from the international finance market to purchase cocoa beans from farmers through the LBCs.

The loan is often guaranteed by the season’s cocoa beans, thereby making the entire arrangement a cocoa trade-financing facility.

Noah Amenyah, Public Affairs Manager of COCOBOD, who was announcing the deal at a press conference in Accra yesterday, said in spite of the low crop yield the board was able to get the banks to subscribe which was good news.

COCOBOD is expected to receive the money, which is a 11-month credit facility by the first week of October.

Mr. Amenya said COCOBOD will continue to regulate the industry to achieve its mandate, adding 'we will continue to make all our stakeholders happy by meeting their demand'.

Background
The cocoa industry has been the backbone of Ghana’s economic development over the years.

The industry has created employment for millions of Ghanaians and serves as a major source of foreign exchange earner for the country.

Cocoa production in Ghana has also increased significantly since the 1999/ 2000 crop season, reaching an all-time high of more than one million metric tonnes in the 2010/ 2011 crop season.

The increase in production levels requires substantial financial resources to enable COCOBOD to finance the purchase of cocoa beans.

To that end, the offshore syndicated trade finance arrangement was put in place in 1993 to enable COCOBOD to secure a loan facility to finance cocoa purchases and for other payments each year.

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By Cephas Larbi