Editorial by Ghanaian Times: Don’t relent in effort to locally fund cocoa purchases!

After 32 years of contracting a syndicated loan annually to purchase cocoa from farmers in the country, the Ghana Cocoa Board (COCOBOD) says that beginning in 2024/2025, it will finance the purchase of cocoa beans and its operations domestically.

Over the past three decades, COCOBOD has been securing a syndicated loan each year, usually around August or September.

Going for syndicated loans to buy cocoa from the farmers at a fixed price and protect them from changes in global prices meant that COCOBOD needed amounts too large to attract the willingness of a single entity to lend to a single borrower.

What that implied was that COCOBOD didn’t have enough of its own funds to undertake that operation.

Some of us had been worrying about the COCOBOD’s annual cap-in-hand exercise, wondering why that should be so for an agency of a country that was the world’s leading producer of cocoa between 1911 and 1976, contributing between 30-40 of the global total output, but now second with cocoa still contribut­ing a chunk part of the country’s foreign exchange earnings.

Definitely, something was wrong somewhere that needed to be addressed.

For instance, in September 2020, the COCOBOD signed an agreement for a US$1.3 billion syndicated loan facility for the 2020/2021 cocoa crop, yet in 2021 it recorded a loss of GH¢2 billion, which was said to be the result of a strategic decision to maintain farmer payments despite the organisation’s financial per­formance.

Today, COCOBOD claims it is financially healthy, citing over GH¢2 billion in profit it made in 2022/2023.

Taking into consideration the current financial standing of COCOBOD, we wish to agree that it can wean itself off syndi­cated loans, beginning from the 2024/2025 cocoa season as it has announced.

However, the Ghanaian Times is once again worried about something important for that journey.

Why did the Chief Executive Officer (CEO) of the COCO­BOD, Joseph Boahen Aidoo, refuse to answer at the news conference in Accra on Tuesday the question as to how cocoa purchases could be funded with­out the syndicated loan?

Meanwhile, the CEO made a heart-warming statement “We are looking for US$1.5 billion this crop season, and looking at the interest rates last year, which were over eight percent, plus the cost, it means that we can save more than US$150 million by the decision not to go offshore.”

The Ghanaian Times thinks his unwillingness to answer that question and that the source of funding could only be given later can cause others to speculate in certain ways.

Can we say, for instance, that the COCOBOD is not far advanced in its readiness for the change because, as indicated in this piece, in the case of the syn­dicate loans, it always went for it in August or September, meaning it finished the preparation earlier before the actual process for the loan began?

If we are in August and securing the funding locally, what prevents the COCOBOD from giving, at least, an inkling of the source(s) of the domestic funding of COCOA purchases?

Whatever the case, the Ghanaian Times prays that COCOBOD will succeed in its efforts to wean itself off contracting syndicated loans for cocoa purchases so that the country can enjoy the related benefits.