COCOBOD asked to Account for $I.3 Billion Syndicated Loan

Ranking Member on the Food, Agriculture, Cocoa Affairs Committee of Parliament, Eric Opoku, has asked the Ghana Cocoa Board (COCOBOD) to account for the $1.3 billion Cocoa Syndicated loan it took in 2022.

According to him, before the new $800 million that is expected this year is approved by parliament, the COCOBOD must give proper accounts of the previous expenditure.

He noted that COCOBOD had been saddled with gross mismanagement over the years.

“What we do is that before we approve the new facility, they have to convince us to how they used the previous one. And probably, it is one of the reasons they haven’t been able to bring the facility to us, why they are. We’ve heard of the GHC800 million arrangements, but it hasn’t come to parliament yet.

“When it comes, they must be answerable for how they utilized the first faci9 they took, the GHC 1.3 billion. And if we are not convinced that that money was used in the best interest of our cocoa farmers and that matter Ghanaians, they will have difficulty getting approval for this one,” he was quoted by citinewsroom.com.

Ghana’s COCOBOD is currently seeking to borrow $400 million from cocoa traders to finance its operations for the 2023/2024 season as the syndicated loan drags.

Eric Opoku opined that the arrangement is not favourable for the organization as it is already struggling to pay its debts.

“For six continuous years, COCOBOD had been making losses. How can they set aside money to finance their activities? Don’t forget that the loan that we take, we don’t use all the money to buy cocoa. Part of it is used to pay their salary; part of it is used to pay their administrative cost.

“And the Minister for Finance told us that they are using 53% of the total proceeds from cocoa as administrative costs and just something above 40% goes to the farmers. So, you can imagine what is happening. All mismanagement and COCOBOD is now undischarged, insolvent,” he said.

Ghana Cocoa Farmers Struggle amid Cash Shortage – BBC REPORT

A latest BBC report had highlighted the current state of Ghana’s cocoa sector as cocoa farmers grapple with cash challenges

The report said Ghana’s cocoa farmers are complaining that they’re broke as the cocoa Board-to which they are obliged by law to sell their produce-is unable to pay them.

According to the farmers, they have been unfairly treated.

President of the Ghana National Cocoa Farmers Association, Anane Boateng, said his members have had to do all the work but the regulator is struggling to make profits.

Cocoa Loans: Let’s Admit the Situation Is Dire- Joe Jackson Also to express concern about the developments in the Cocoa sector is Financial Analyst , Joe Jackson who has asked government to admit the extent of the country’s current economic state.

According to him, cocoa farmers crying because the Ghana Cocoa Board cannot pay them is “more bad news for Ghana’s economy”.

His comments were a reaction to a BBC report that noted that Ghanaian cocoa farmers say they are broke.

Joe Jackson wrote on X: “Ghana’s cocoa farmers say they’re broke, as the cocoa board, which they’re obliged by law to sell their produce, us unable to pay them. More bad news for Ghana’s economy. Cry, beloved country. Please let’s admit that the situation is dire”.

Earlier, Vice President of Policy think-tank IMANI Ghana, Bright Simons, said he is in a state of disbelief over the government’s denial of the state of the economy.

He said the country’s current credit situation is one of the worst that the country has experienced in a long time, but the government refuses to accept the depth of the crisis.

Bright Simons also lamented the current inability of social society organizations to engage the government on pertinent issues because of its attitude towards the crisis.

Bright Simon’s worry stems from the country’s inability to obtain loans to finance it’s activities due to its weak credit status.

“The challenge here is that we, those of us in the policy activism space, can no longer engage with the govt because it refuses to accept the reality we see. It adamantly insists that everything is great. So, we must be hallucinating. This is very surreal. Never been as confused.

“Those who do not understand the unique constraints we are now operating under will mistakenly assume that we just like trumpeting bad news and talking down Ghana. No! We are stuck in a loop of trying to confirm what our eyes see that the govt always denies. So, an endless back and forth!” He wrote on X on November 8, 2023.

COCOBOD Refutes Claims of Delay in Acquisition of $800 Million Syndicated Loan

Meanwhile, the Ghana Cocoa Board has noted that processes are still in progress for the acquisition of the $800 million Cocoa Syndicated loan for this year despite ongoing hurdles. It explained that the preparations to use a refinancing arrangement to secure $400 million from international buyers for purchases at the beginning of the 2023/24 season were on course.

There has been some form of unrest in recent times after reports of the government’s inability to secure the yearly syndicated loan due to banks’ skepticism over the country’s debt levels.

Is a press release on November 10, 2023, it said “COCOBOD planned a two-prong financing for the 2023/24 crop season in an effort to diversify its source of funding for the annual cocoa purchases . The strategy was, there, to use a refinancing arrangement with the international buyers to raise an amount of US$400m for purchases at the beginning of the season in September 2023″.

“These initial funds were expected to be augmented by an additional US$800m loan from a syndicate of lenders by the end of November 2023.

After engagements with buyers for several weeks, the arran6 was however discontinued. Thus, since the beginning of the season, cocoa purchases have been financed with no collateralized cocoa sales proceeds,” parts of the statement read

COCOBOD insisted that it is still in the process of securing the syndicated loan for the 2023/24 Crop Season.

“As a matter of fact, the board has so far received form response from our bankers in this regard, and the Cocoa syndicated Loan has been laid in Parliament for consideration and approval. We wish to use. This medium to assure our stakeholder that the necessary arrangements have been made to secure enough funding for cocoa purchases for the year under review,” the board noted.

Source: The Insight