Ghana’s cocoa regulator – Cocobod has signed the 1.3 billion dollar annual syndication loan for the purchase of 900,000 metric tonnes of cocoa for the 2020-2021 cocoa crop season.
The syndication loan was raised from 28 banks including 4 local banks – Ecobank, SGSSB, ABSA, and Stanbic banks.
The signing comes days after President Akufo-Addo increased Ghana’s cocoa producer price by 28 percent with cocoa farmers now taking home GHC660 per bag of cocoa beans.
Speaking at the virtual signing of the facility, Chief Executive of Cocobod, Joseph Boahene Aidoo, detailed the conditions for the syndication loan which is payable in seven calendar months with a Libor of 1.35 percent.
One of the immediate impacts the deal will have on the economy is that it will improve Bank of Ghana’s reverses, a situation that could give investors and currency traders some assurance about the central bank’s ability to defend the local currency.
The payment to the farmers and licensed buying companies will also improve liquidity in the banking system.
The inflows of these funds will also help stabilise the cedi in the last quarter of this year.
COCOBOD will use the facility to raise cocoa yields per hectare and increase Ghana’s overall production.
These include financial interventions to sustainably increase cocoa plant fertility, improving irrigation systems, rehabilitating aged and disease-infected farms. The funds will also help increase warehouse capacity and provide support to local cocoa-processing companies.
Ghana’s cocoa sector employs some 800,000 rural families and produces crops worth about $2 billion in foreign exchange annually – considering the ravaging effects of the Coronavirus on economies, COCOBOD fears the future of small-holder cocoa farmers could be bleak.