Parliament approves $800m cocoa purchasing loan

Parliament has approved a trade finance facility between Ghana Cocoa Board (COCOBOD) and a consortium of banks and financial institutions for $800 million to finance the purchase of cocoa for the 2023/2024 crop season.

Per the agreement, the government is acting as a guarantor.

As part of the agreement, Parliament also approved a waiver of stamp duty amounting to $4 million.

The agreement was presented to Parliament on Thursday, November 9, this year by the Minister of Roads and Highways, Kwasi Amoako-Attah, on behalf of the Finance Minister, Ken Ofori-Attah, in accordance with Articles 174(2) and 181 of the 1992 Constitution.

Pursuant to Standing Orders 169 and 171 of Parliament, the finance facility and the waiver request were referred to the Finance Committee for consideration and report.

The First Deputy Speaker of Parliament, Joseph Osei-Owusu, who was presiding, also directed the leadership of the Committee on Food and Agriculture and Cocoa Affairs to join the Finance Committee to consider the referral.

Purpose

The loan is to enable COCOBOD to purchase cocoa beans from farmers through licensed buying companies for the 2023/2024 cocoa season.

The facility also provides the nation with the opportunity to demonstrate its good track record in borrowing from the international financial market.

Stamp duty waiver

The stamp duty waiver is also in line with the Stamp Duty Act, 2005 (Act 689) which requires that a stamp duty of 0.5 per cent on the loan facility be paid.

The Finance Committee report on the agreement, presented by the Chairman of the committee, Kwaku Kwarteng, to plenary for approval, noted that the Domestic Tax Revenue Division of the Ghana Revenue Authority had, upon the request of COCOBOD, assessed the stamp duty on the syndicated amount.

The committee report said the waiver was necessary to enable COCOBOD to utilise the full amount of the facility for cocoa purchase and related activities.

Benefits

The committee further said the COCOBOD syndicated facility brought in foreign exchange, thereby aiding the build-up of foreign reserves in support of the management of the exchange rate.

The report said the schedule for the draw down was  such that the full amount of the loan in United States dollars was expected to be drawn down within a relatively short period of about four months, spanning November this year to February next year.

"This is expected to have immediate impact on the foreign exchange reserve position of the Bank of Ghana," the report said.

Projection

The committee said for the 2023/2024 crop year, cocoa production had been forecast to be 850,000 tonnes.

It explained that the projected figure was based on the trends of cocoa production over the past years and good agronomic practices being adopted by COCOBOD.

Motion

In presenting the motion for the adoption of the report and subsequent approval of the loan, Mr Kwarteng advised COCOBOD to take appropriate steps, including the diligent implementation of the Ghana Tree Crops Diversification Project, to ensure that the production target was achieved in a sustainable manner.

Secondment

In seconding the motion, the National Democratic Congress MP for Bolgatanga Central, Isaac Adongo, said COCOBOD was broke and poorly managed but he was supporting the loan agreement in the interest of poor farmers.