Business News of 2014-05-29

Cocoa to Rescue cedi

USD2bn syndicated loan coming
In a move for Ghana to recapture its past enviable position as world largest producer of cocoa, the country’s cocoa industry regulator, COCOBOD, is just about signing a $ 2 billion syndicated loan facility with International financial firms for the purchase of this year’s crop. While the initiative is geared towards Ghana securing its previous number one spot in World cocoa production, the move is also targeted at shoring up the nation’s reserves thereby arresting the never-ending and fast depreciation national currency, the cedi. The $ 2 billion syndicate loan, which is expected to hit COCOBOD’s account by the end of the third quarter of this year, financial analysts say will fill the big hole in the country’s almost depleted foreign reserves at the Bank of Ghana and aid the BoG ‘fight’ the cedi depreciation. The Ghana COCOBOD’s aims at raising the country’s annual average cocoa production from the present 800, 000 tones, which makes Ghana trail behind neighboring Cote d’Ivoire as world leading producer of the crop to 1 million tones. The Chief Executive Officer of COCOBOD, Dr Stephen Opuni and Board Chairman, Ambassador Daniel OheneAgyekum have confirmed in separate interviews. According to the two senior government officials, who incidentally are both chieftains of the ruling party, the decision to increase the yearly syndicated loan from last year’s figure of $1.2 billion to about $ 2 billion would position Ghana towards reclaiming its past envious position as leading producer of cocoa in the world. The decision, the duo noted, is also geared towards achieving President John DramaniMahama’s vision to make the cocoa sector attractive for investments and to sustain it beyond the present generation. The COCOBOD syndicated loan, a yearly initiative by the industry regulator is used to purchase cocoa beans from farmers ahead of each crop year in Ghana. COCOBOD syndicate loans through local and international financiers from Europe. According to players in the cocoa industry, the high participation of international and local banks in the annual phenomenon is as a result of Ghana’s integrity and image of producing quality cocoa beans. Ghana in its heydays was the world’s leading producer of cocoa but lost that position to Cote d’Ivoire to factors such as unimproved farming methods, smuggling and low incentives to farmers. But, DrOpuni and MrOheneAgyekum have both assured government’s commitment to lead Ghana to take back its past glory. The $2 billion syndicated loan meant for the purchase of cocoa beans is expected to hit COCOBOD’s account by end of third quarter of this year. Financial analysts believe that the move will help the already announced Bank of Ghana measures to stem the persistent depreciation of the local currency, the cedi, against major trading currencies which has contributed to the ongoing hardships in the country.
Source: Al-Hajj
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