The Chief Executive Officer (CEO) of the Ghana Cocoa Board (COCOBOD), Dr. Stephen Kwabena Opuni, has put pen to paper for a syndicated loan of US$1.8billion from some 24 banks abroad, to purchase cocoa beans for the 2016/2017 crop season and other related activities.
What is significant is that, among the 24 banks, is Ghanaian-owned, Fidelity Bank, which last August won the 15th edition of the Ghana Banking Awards in Accra, as the best in the industry for the year 2015, ahead of 27 other banks shortlisted for the awards.
The bank, also won the Corporate Social Responsibility (CSR) Bank of the year, and Trade Deal of the year, among others.
The US$1.8 billion, which is expected to hit Government of Ghana (GoG) account in the coming days, is to help “cocoa farmers, receive prompt payment for their produce”, Dr. Opuni has said.
The other banks, which were described as Lead Arrangers were; Deutsche Bank, Natixis, Cooperative Rabobank, Nedbank, Societe Generale, Standard Chartered Bank, Bank of Tokyo Mitsubishi, DZ Bank and Ghana International Bank.
The COCOBOD boss, who was with the Deputy Minister of Finance, Cassel Ato Forson, at a ceremony on Wednesday in Frankfurt, Germany, assured the banks, Ghana was committed to repay the loan at the stipulated time of August, 2017.
The facility comes with an all-inclusive rate of 1.468 percent.
Ghana’s Parliament, had earlier approved a total of US$2bllion, but the CEO, during the signing ceremony said that, though they are entitled that amount, COCOBOD will ask for the remaining US$200 million if the cocoa crop performs better and requires further funds.
At the signing ceremony which was televised live to the Ghanaian media at the COCOBOD head office in Accra through SKYPE, Dr. Opuni expressed appreciation to the banks and hoped that the country will be able to meet the output target of between 850, 000 metric tonnes and 900, 000 metric tonnes for crop season.
He told representatives of the banks “we are confident of achieving our production target of 850,000-900,000 metric tonnes during the 2016/2017, cocoa season which begins in October 2016”.
According to him effort to hit the production target for the 2015/2016 cocoa season was unsuccessful blaming it on severe and prolonged dry weather conditions that lasted from December to March, 2016.
To mitigate the effect of climate change he said “COCOBOD is collaborating with the Forestry Commission of Ghana and Ministry of Lands and Natural Resources of Ghana, to promote Agro forestry system. Our cocoa farmers are also being educated to engage in environmental friendly practices on their farms”.
He mentioned deliberate interventions introduced by the government as the free fertilizer, free distribution of 60 million hybrid cocoa seedlings equivalent to about 50, 000 hectares of cocoa farm to farmers which will be done annually to rehabilitate over-aged cocoa farms, disease farms.
He was optimistic that with the introduction of these initiatives, farmers will be supported to create about 500, 000 hectares of new cocoa farms over the next 10 years.
“All these interventions are aimed at sustaining productivity in order to improve upon our yields. This productivity package has also attracted and motivated over 40, 000 young men and women to engage in cocoa farming. All these initiatives are expected to add another 500, 000 to 750, 000 metric tonnes of cocoa after the next 10 years to our current yield.
COCOBOD is also assisting to provide new schools and rehabilitate old ones in cocoa growing communities to eliminate the worst forms of child labour and ensure that children of school-going age in cocoa growing areas have access to quality education”.
The US$1.8 billion is different from the facility secured from these banks last year to rehabilitate roads in six cocoa growing regions Ashanti, Brong Ahafo, Western, Central Eastern and Volta.
Meanwhile at the same programme, the Deputy Director of Finance at the COCOBOD, Asamoah Frimpong, attributed the over 23 percent increase in the all inclusive rate for this year’s cocoa syndicated loan, to a rise in the Libor rate during the period.
Some industry watchers have raised concern at the increase particularly at a time that cocoa sector was faced with an array of constraints which has affected output.
But explaining the rationale for the increase, Mr. Asamoah Frimpong said the increase was largely because of the rise in the libor rate at the time of negotiating this year’s credit facility.
“The main factor causing the change in the all inclusive rate was the change in the Libor rate. Last year at the time we were negotiating the loan, the libor rate was 0.1866 percent. That had however shot up to 0.446 percent so the difference was actually caused by the change in the libor.
Also, so many factors can contribute to the increase,” he stated. The exit of Britain from the European Union (EU) in June this year also affected decision on the libor rate.
The LIBOR is a benchmark rate that some of the world’s leading banks charge each other for short-term loans. Though Ghana signed 1.8 billion dollars, the country is entitled to an additional 200 million dollars from its creditors when the crop performs better and requires further funds.