The Ghana Cocoa Board (COCOBOD) has prevailed on banks that participate in the annual cocoa loan syndication to consider reducing the interest charged on the loan to enable the board to borrow more from them in subsequent years.
The extra funds are needed to improve the lots of farmers and the economy in general, COCOBOD’s Chief Executive Officer, Mr Joseph Boahen Aidoo, said on September 20 after signing an agreement to conclude the syndication of some US$1.3 billion for the 2016/17 cocoa season.
The funds were secured from a consortium of 25 banks at an interest rate of 1.88 per cent.
While acknowledging that the cost of the facility had always been “competitive,” Mr Aidoo said it was imperative for participating banks to “consider reducing the rate next year to enable us to access more funds”.
With capital projects still outstanding, the CEO said the board might soon be returning to the banks for further medium-term financing to help execute such projects.
He mentioned sustainable cocoa production and consumption, farm mechanisation, roads and railway infrastructure development and provision of storage facilities and yield enhancement techniques as some of the projects that the board would be looking to finance should it return to the banks to borrow more money.
Bring back CSR
Globally, financial experts have long praised COCOBOD’s syndication process as one of the best long running commodity-backed deals that continue to attract interest from dozens of financial institutions worldwide.
The syndication process started in the 1992/3 cocoa season, when the board raised US$140 million from a group of banks to finance the season’s cocoa output.
Since then, the syndication has become an annual funfair that foreign lenders look forward to with keen interest.
The board has also maintained its credible repayment schedule by always ensuring that funds taken in each crop season are repaid on or before schedule to allow for syndication to take place.
To help enhance their relationship with COCOBOD, which oversees activities in the multibillion dollar cocoa business, the consortium of banks along the way brought on board a corporate social responsibility initiative that saw them execute projects in selected communities and sectors in the country.
In the 2011/12 cocoa season, the banks bought an anaesthetic machine and drilled a borehole for the Tetteh Quarshie Memorial Hospital in Mampong-Akwapim in the Eastern Region.
In the following season – the 2012/13 crop season, the partner banks constructed a six-unit classroom block for the Ofoase cocoa community in the Central Region at a cost of US$67,700.
Since then, however, the banks have not undertaken any project, causing the COCOBOD CEO to ask for it to be revisited.
While commending the banks for the gesture, Mr Aidoo said: “If for any reason it slipped under the banks’ radar, we wish to prompt the consortium of banks for this year’s facility to bring life to this heart-touching profit-sharing gesture.”
This year’s loan, which is the 25th of its kind, was lead-arranged by Rabobank, Credit Agricole Corporate & Investment Bank, Natixis, Standard Bank, Sumitomo Mitsui Banking Corporation and Ghana International Bank.
Cocoa, of which Ghana is the second largest producer after Cote d’Ivoire, accounts for 4.5 per cent of the country’s annual economic output and contributes about 25 per cent of merchandised exports.
Last year, export earnings from cocoa and related products amounted to US$2.4 billion.
This year, COCOBOD is hopeful that the country will produce some 850,000 tonnes, the same as last cocoa season.