The Herald’s digging into the troubles at the Ghana Cocoa Board (COCOBOD) has revealed a more disturbing development that the country’s cash cow; the cocoa sector is in a dire situation with 73 of its containers with agrochemicals and implements are stuck at the port of Tema for almost a year plus.
Most of the agrochemicals running into hundreds of millions of United States Dollars, have expiry dates, and could be declared unsuitable.
This, according to the paper’s information, is due to the government’s shocking decision to withdraw tax exemptions enjoyed by COCOBOD over the years, insisting that the institution pays import duty on all its imports into the country as happens with private companies.
Insiders have told The Herald that an amount of GH¢3.9 billion is expected to be paid by COCOBOD to the Ghana Revenue Authority (GRA) and other institutions operating in the Tema Port, before the 73 containers of agrochemicals, jute sacks and other farm implements are allowed to move out of the port for distribution to farmers.
These locked agro products, including fertilizers, were previously given out to cocoa farmers for free as interventions until the advent of the Akufo-Addo government.
Attempts to sell the critical cocoa inputs to the farmers at subsidized prices did not last and the government went for a full cost recovery. This has affected productivity in terms of yields, but the government appears unperturbed.
Many fear that current development could lead to poor agronomic practices in pests and disease control.
The results will be low cocoa yields and the low revenue into the Ghanaian economy which is literally on a life-support machine with many suppliers demanding payments for goods and services they have provided.
The colossal GH¢3.9 billion import duty came about because the Ministry of Finance got Parliament to do away with the tax exemption for the country’s biggest revenue earner.
Aside from the GH¢3.9 billion, The Herald is informed that COCOBOD’s chosen clearing agent, would have to raise a whooping GH¢38 million as additional charges.
The Herald is further informed that the disturbing state of affairs, has led to the management of COCOBOD rushing to Parliament to have the new directive repealed and the tax exemption reversed.
The House is said to have reversed its decision, but it is not clear when management will be writing to the Finance Ministry or GRA for authorization to have the GH¢3.9 billion import duty waved for the products to be cleared and sold to the farmers who have complained about how unprofitable cocoa farming had become.
In May, this year, news portal Bloomberg, reported that the International Monetary Fund (IMF) is backing programmes by the Akufo-Addo government aimed at COCOBOD’s losses.
Ghana needs to phase out some COCOBOD interventions. IMF was confident Ghana government will agree to restructuring by first review.
The world’s second-biggest cocoa producer will need to cut its industry regulator’s losses as part of an economic reform programme supported by the IMF for the three-year, $3 billion IMF bailout.
The first disbursement of about $600 million, has already arrived. Further payments will require the Ghanaian government to meet specific objectives aimed at restoring economic stability and reducing the country’s debt burden ahead of periodical IMF reviews.
Indeed, just last week, it was announced that COCOBOD was facing severe financial challenges and has been forced to extend an invitation to holders of its short-term debt securities (cocoa bills) to exchange that for longer-term debt securities.
The exchange programme being undertaken by COCOBOD, is also with a longer-term principal maturity date. Participation in this invitation to exchange is, however, voluntary.
Notwithstanding the invitation to exchange eligible bills for the new bonds, COCOBOD, in its sole discretion, may settle the eligible bills in full or in part and the eligible holders’ subscription to receive new bonds is voluntary.
This comes amid reports that COCOBOD management is mostly unable to pay for services rendered to it, and its imports are also said to be stuck at the ports over import duties.
Additional reports are that the COCOBOD is over-staffed. It has more than 10, 000 workers employed and many of these are ruling party sympathizers who idle about. They were engaged more for political expediency, rather than availability of vacancies, their skill and competence.
It was revealed that since 2017 to 2022, when COCOBOD was moved under the Ministry of Food and Agriculture by the Akufo-Addo government, it has repeatedly made losses with a debt burden said to be around GH¢16 billion.
Last Thursday, the Finance Minister, Ken Ofori-Atta, was forced to announce a programme to restructure that debt.
COCOBOD, is offering Eligible Holders accrued and unpaid interest (“Accrued Interest Payable”) on their Eligible Bills validly tendered and accepted by the COCOBOD, calculated from and including the last interest payment date up to, but excluding, the Settlement Date, which amount will be paid to such Eligible Holders in the form of capitalized interest (rounded down to the nearest GHS1.00) added to the principal amount of the New Bonds and distributed across the New Bonds in the same proportion as the Exchange Consideration Ratios.
Eligible Holders, whose validly submitted Offers are accepted by the COCOBOD, will receive on the Settlement Date the New Bonds with an aggregate principal amount (rounded down to the nearest GHS1.00) equal to the principal amount of Eligible Bills tendered plus Accrued Interest
Payable, which aggregate principal amount will be allocated in accordance with the consideration ratios described in the New Bonds and Exchange Consideration per principal amount of Eligible
Bills tendered (including the Accrued Interest Payable in respect thereof).
Eligible Holders whose offers or exchange instructions are accepted will receive the five New Bonds in the above-mentioned ratios, each maturing on a one per year basis consecutively from and including 2024 through and including 2028.
As is customary with listed corporate securities, the New Bond Documentation does not restrict the ability of the New Bonds to be traded or transferred in the secondary markets.
Last Friday, COCOBOD, through Calbank announced the launching of “a debt securities exchange programme (the Exchange Programme) under which it is inviting holders of its short-term debt securities (the Cocoa Bills) to voluntarily offer to exchange their Cocoa Bills (representing an aggregate principal of approximately GHS 7.93 billion) for longer-term debt securities with averagely lower coupon rates to be issued by COCOBOD (the Bonds).
“The Bonds will be issued pursuant to the terms of (the Programme Documents):
“(a) an exchange memorandum dated 14 July 2023 (the Exchange Memorandum);
“(b) a trust deed dated 14 July 2023 and entered into between COCOBOD (as issuer) and Consolidated Bank Ghana Limited (CBG) (as trustee for the holders of the Bonds); and
“(c) an agency agreement dated 14 July 2023 and entered into by COCOBOD (as issuer), CBG (as bond trustee and paying bank), and the Central Securities Depository (GH) LTD (as transfer agent, calculation agent and registrar in respect of the Bonds).
“Holders of the Cocoa Bills whose offers are accepted by COCOBOD will receive five (5) different Bonds with an aggregate principal amount (rounded down to the nearest GHS 1.00) equal to the principal amount of Cocoa Bills tendered (in addition to any accrued and unpaid interest due on such Cocoa Bills).
The five (5) Bonds will mature on a one-per-year basis consecutively from (and including) 2024 to (and including) 2028. The reasons for undertaking the Exchange Programme have been explained by the chief executive of COCOBOD in a letter dated 11 July 2023 from the chief executive to all holders of the Cocoa Bills. A copy of the letter has been included in the Exchange Memorandum.
“For further details regarding the Exchange Programme, all holders of the Cocoa Bills are advised to read the contents of the Programme Documents carefully and consult a dealer, investment adviser or other professional for appropriate advice before making an investment decision. Copies of the Programme Documents are available at https://projects.morrowsodali.com/CocobodDDE, https://calbank.net/CocobodDDE and the website of COCOBOD (i.e. https://cocobod.gh/CocobodDDE).
“Offers may be submitted from today (i.e. 14 July 2023) until 4pm on 31 July 2023 (unless otherwise extended by COCOBOD in its sole discretion and with the prior approval of the Securities and Exchange Commission). An offer (once made) cannot be revoked or withdrawn at any time except in the limited circumstances described in the Exchange Memorandum.
“This announcement is for informational purposes only and is not an invitation to exchange to any holders of the Cocoa Bills. The invitation to exchange the Cocoa Bills is only being made pursuant to the Exchange Memorandum.
“COCOBOD has appointed CalBank Plc (CAL) as arrangers for the Exchange Programme.
