Parliament approves $2b loan for cocoa purchases

Cocoa purchases by the Ghana Cocoa Board (COCOBOD) for the 2016/2017 crop season is to increase by 50,000 metric tonnes over the 850,000 metric tonnes purchased last year.

This increase, which brings the expected total purchases for this year to 900,000 metric tonnes, would be made possible with the approval by Parliament, on Wednesday, of a $2 billion loan facility to be sourced from a consortium of financial institutions.

The institutions include Deutsche Bank, Natixis of France, Nedbank Limited of South Africa, Standard Chartered Bank, Societe General, The Bank of Tokyo-Mitsubishe UFJ Limited, with the DZ Bank AG of Germany as Co-Arranger.

The facility would also enable COCOBOD to make payments to some stakeholders.

COCOBOD is expecting to purchase the cocoa beans at an average price of 3,100 dollars per metric tonne. The loan would be used to collateralise about 645,162 metric tonnes of cocoa.

It is also expecting an estimated revenue of $2.79 billion, out of which about 72% represents the $2 billion facility.

Part of the funding would be invested to boost cocoa roads that lead to cocoa-growing areas and to shore up other activities relating to the transportation of the raw material from the farms to various destinations.

A Deputy Finance Minister, Mr Cassiel Ato Forson, in a debate in the House, approved the facility, commended cocoa farmers in Ghana for adopting better agricultural practices that had led to increased cocoa yields, which would enable the COCOBOD to purchase more beans this season.

He expressed confidence that the COCOBOD had the capacity to repay the loans owing to the availability of the beans during the season.

He explained that Agency was confident in achieving its target in the 216/2017 crop season.

The COCOBOD last year borrowed $1.8 billion for the 2015/2016 crop season to purchase an estimated 850,000 metric tonnes of cocoa.

Source: GNA