Parliament approves $800m cocoa loan for COCOBOD

A syndicated loan totaling US$800,000,000 has been approved by Parliament to be used to buy cocoa beans during the 2023–2024 cocoa season.

The House was invited to evaluate and adopt the terms of the Agreement (negotiated Rates in the attachment to this Memorandum) for US$800,000,000 by Kwaku Kwateng, the chairman of the Finance Committee in Parliament.

The Ghana Cocoa Board will use a Receivables-Backed Trade fund Facility to fund the purchase of cocoa for the 2023–2024 harvest season. Additionally, stamp duty on the facility, which totals US$4,000,000., will be waived.

The Chairman contended that COCOBOD’s cocoa purchasing activities need more than US$ 2.0 billion annually, and that COCOBOD typically sources the offshore syndicated facility in order to facilitate timely payments for cocoa and profits to other stakeholders.

“The facility also enables COCOBOD to maximize sales and shipments in order to generate the best revenues for financing the supply of cocoa,” he stated.

The Minister of Food and Agriculture approved COCOBOD’s request to borrow up to US$1,500,000 for the 2023–2024 cocoa season.

Nonetheless, COCOBOD predicted that prices will probably increase to US$2,600 a tonne and more based on a detailed analysis of the state of the global market. Therefore, it was wise to decide to cap the facility’s amount at US$800,000,000.

The Finance report on the loan said, “in order not to lock in many volumes at lower prices, but to take advantage of better prices in subsequent months.”

A little over 47% of the anticipated 850,000 tonnes of cocoa beans would be bought with the loan.
The two installments of the facility will be paid for in October 2023 and February 2024.

“The Trade Facility is to enable COCOBOD to raise adequate funds to purchase cocoa beans from farmers through licenced buying companies for the 2023/24 cocoa season,” the sector minister at the committee level stated in support of the loan.

Payment of margins to stakeholders is another aspect of the purchasing processes.

For COCOBOD to successfully handle its operations pertaining to the procurement, quality control, storage, and export of cocoa, the syndicated facility is therefore essential.

Source: Ghanatodayonline.com