COCOBOD borrowing at 25% to pay cocoa farmers -- Agric Minister reveals
The Minister of Food and Agriculture, Dr Owusu Afriyie Akoto, has stated that the financial challenges confronting the Ghana Cocoa Board (COCOBOD) have worsened in recent times, rendering the company unable to pay cocoa farmers from its internally generated funds (IGF).
Advertisement
Dr Akoto said the situation had forced the COCOBOD to resort to borrowing from the Bank of Ghana (BoG) to enable it to pay farmers for the cocoa it had purchased.
The loans are taken at interest rates that range between 21 and 25 per cent.
The minister made the disclosure at the swearing-in ceremony of the Board of Directors of the Cocoa Marketing Company (Gh) Limited (CMC) in Accra on Tuesday.
While declining to state how much had been borrowed so far, Dr Akoto said the depletion of COCOBOD’s coffers by the previous administration had combined with the steady decline in cocoa prices to make it difficult for COCOBOD to finance its operations.
Cocoa prices which averaged $3,000 in 2016 fell to around $1,800 in August.
The price slump had cost the nation some $1 billion over the last seven months, the minister said, adding that the government had begun efforts aimed at plugging the revenue loopholes.
He said, however, that notwithstanding the price decline in cocoa, the government had resolved not to reduce the producer price of the commodity paid to farmers in order to motivate them to produce more for export.
Other Trending Stories
He said the gesture should also discourage unscrupulous farmers and persons from smuggling the beans to neighbouring Cote d’Ivoire, where the price paid to farmers had reduced following the price decline on the international market.
Board members
The CMC is a subsidiary of the COCOBOD and was established to market the country’s premium cocoa beans on the international market.
The new board is made up of Mr Joseph Kobina Essidu as Chairman, with Mr Anthony Osei Boakye, Dr Emmanuel Osei Tuffour and Mr Charles Nornoo as members.
The rest are the Second Deputy Governor of the BoG, Dr Johnson P. Asiama; Mr David Klotey Collison of the Ministry of Finance and Dr K. Mensah-Aborampah of the CMC.
Dr Akoto congratulated the members on their appointment and urged them to consider it as a sacred duty assigned them by the President to help improve the cocoa sector of the economy.
He said they were taking office “at a time the cocoa sector is in a critical state”, hence the need for them to be resolute in the discharge of their duties, while holding high the tenets of good governance.
{loadmodule mod_banners,Nativead1}
Mismanagement
The minister also blamed COCOBOD’s financial predicament on mismanagement and gross disregard for financial prudence by the previous administration.
That inaction, he said, had placed the cocoa sector in “a mess”, requiring time and hard work to help salvage it.
Dr Akoto said, for instance, that although the previous administration budgeted to spend GH¢1.6 billion on cocoa roads, it ended up signing contracts in excess of GH¢5 billion, raising questions about the oversight roles of the previous board of directors.
He said an audit of the cocoa roads project was currently underway to help ascertain the financial burden and possible acts of violations of the law.
Once concluded, he said, the ministry and the government would take the necessary actions to help forestall a repeat of what had happened.
Advertisement
The Chairman of the board, Mr Essidu, thanked the minister and President Nana Addo Dankwa Akufo-Addo for their appointment and pledged to harness the expertise of his colleagues to ensure that the CMC remained the best marketer of cocoa globally.
The COCOBOD, which oversees operations in the cocoa sector, was recently moved from the Ministry of Finance to Food and Agriculture as part of measures aimed at revamping the cocoa sector.
A team from COCOBOD and the ministries of Finance and Food and Agriculture are currently in China to sign this year’s cocoa syndicated loan of $1.3 billion.