Joseph Boahene Aidoo, CEO of COCOBOD

The first tranche of the $1.5 billion Cocoa Syndicated Loan will hit the accounts of the Bank of Ghana by the first week of October, 2021, the Deputy Chief Executive in charge of Finance and Administration at Ghana Cocoa Board, Emmanuel Ray Ankrah has told Joy Business.

According to him, the payment of cocoa farmers and Licensed Buying Companies (LBCs) should commence at the start of the next cocoa crop season, beginning October 1st, 2021.

“The season starts on the 1st of October. We are hoping that the money should be in by the 2nd or 3rd of October. As soon as the season begins, our LBC needs to be paid whatever produce they have. We are working rapidly to ensure payments are made. The first tranche which will be more than 50% of what we are borrowing, should hit our account to begin payments,” he stated.

The $1.5 billion Cocoa Syndication Loan for the 2021/2022 cocoa crop season is the largest soft commodity deal in sub-Saharan Africa, and will be used to finance cocoa purchases and related operational activities in the crop season.

“The facility was oversubscribed by $200 million with COCOBOD’s impressive corporate governance and clean sheet of refinancing debts ahead of time informing the ‘mad rush’ by prospective lenders,” the Deputy Chief Executive in charge of Finance, further revealed.

The interest on the facility is Libor plus 110 basis points and repayable in seven calendar months. It is projected to help purchase about 950,000 metric tonnes of cocoa.

In all, 24 diverse banks including Standard Chartered Bank, Societe Generale and the Ghana International Bank were among the lead arrangers of the $1.5 billion Cocoa syndicated loan.

COCOBOD exceeds 2020/2021 production target

The signing comes on the back of some positive developments in Ghana’s cocoa sector.

COCOBOD exceeded its production to hit 1.06 million tons for the 2020/21 season, beating the previous record of 1.024 million metric tons in the 2010/ 2011 crop season.

Also, global demand for cocoa is projected to grow by 2.2% for the next crop season.

Since the 1992/93 crop season, COCOBOD has consistently and successfully, through the pre-export syndicated finance facility, obtained receivables-backed syndicated loan each year from the international money market to finance its cocoa purchases.

Cocoa/Cedi buffer

So far, the cedi has depreciated by about 1.30% to the US dollar, selling at about GH¢6.25 to the US dollar on the interbank forex market.

Analysts have however calmed market sentiments about the recent persistent depreciation.

This is because the local currency will be bolstered by the $1.5 billion Cocoa Syndication Loan in October 2021.

Importantly, the current pricing of the cedi to the dollar is also within range of many research institutions forecast for the year.