COCOBOD signs $600m loan agreement with AfDB

The Ghana Cocoa Board (COCOBOD) has officially signed a $600-million loan agreement with the African Development Bank (AfDB) in Johannesburg, South Africa.

The facility is a syndicated loan with the AfDB and the Credit Suisse Group AG to finance key components of COCOBOD’s productivity enhancement programmes.

The AfDB acted as the mandated lead arranger with a tranche of $250 million, Credit Suisse arranged the commercial tranche of up to $350 million, with the Industrial and Commercial Bank of China (ICBC), acting as a joint underwriter.

The signing of the agreement on Tuesday on the sidelines of the 2nd Edition of the Africa Investment Forum in South Africa was witnessed by the President, Nana Addo Dankwa Akufo-Addo.

Background

A statement from the Jubilee House said discussions on the loan started in 2017 between President Akufo-Addo and the President of the AfDB, Dr Akinwumi Adesina, regarding the urgent need for the transformation of Ghana’s cocoa sector.

The discussions and subsequent follow-up meetings culminated in Tuesday’s signing ceremony, which would ensure that COCOBOD implemented production, warehousing and processing interventions, with the ultimate aim of boosting farmers’ incomes and adding value to Ghana’s cocoa beans, it added.

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Appreciation

President Akufo-Addo thanked the AfDB and Credit Suisse for their support for Ghana’s bid to enhance its infrastructure in the cocoa industry.

With Ghana and Cote d’Ivoire being responsible for 65 per cent of the world’s output of cocoa, and with the global chocolate industry worth about $100 billion, the President noted that it was not right that the farmers whose labour and toils were responsible for producing cocoa got only some $6 billion for their effort.

“Very fortunately for me, the Ivorian Leader, Mr Alassane Ouattara, had the same point of view as me. We found out that we had a mutual assessment of what was the reality and the need for us to do something about this arithmetic and change the dynamics of the industry for our farmers,” he said.

He said that was why Ghana and Cote d’Ivoire (COCOBOD and Conseil du Café-Cacao), through the strategic partnership, had merged their production and marketing policies and were now entering the market at a certain basic floor price in order to increase the earnings of farmers.

At the same time, President Akufo-Addo said, Ghana and Cote d’Ivoire realised that it was critical to find a mechanism to scale-up the value chain production of cocoa farmers and the industry.

“And that is where the AfDB came in and led the process, together with Credit Suisse, and put this package together that will enable us to undertake the process of transformation and scaling-up the value chain with warehousing and processing facilities,” he added.

He expressed the confidence that the revamping programme would lead to a considerable enhancement of the incomes of cocoa farmers.

Loan usage

The document that requested approval for the loan showed that $140 million would be used to fight CSSVD, $50 million to build more cocoa warehouses, $200 million to promote the domestic processing of cocoa and $10.6 million to establish a database of cocoa farmers in the country.

It further showed that $40 million would be invested in irrigation services, $68 million in COCOBOD’s hand pollination initiative and $7.5 million to promote the domestic consumption of cocoa products.

The AfDB is extending the same credit amount to Cote d’Ivoire under an initiative meant to improve cocoa production in the world’s two biggest growers of the crop.