COCOBOD to inject US$200 million towards domestic cocoa processing

The Ghana Cocoa Board (COCOBOD) will next year inject US$200 million into domestic cocoa processing.

The money will be given as a loan to augment the working capital of existing local processors that are struggling financially, as well as potential local processors.

This amount, which is expected to be used to buy cocoa beans, will add some 50,000 metric tonnes of beans to the country’s local cocoa processing capacity.

Currently, COCOBOD has signed an agreement with Cargill to add a new line that will increase its annual processing volumes locally from 60,000 to 90,000 tonnes.

President Nana Akufo-Addo in 2017 set the target of local processing to increase from the current 30% to 50% of the nation’s cocoa by the year 2022.

The $200 million and the expansion by international processors operating in the country are to facilitate the achievement of the government's target.

As at the end of August this year, 11 local cocoa processors had processed 291,000 metric tonnes of cocoa beans.

It is estimated that Ghana will produce 850,000 metric tonnes of cocoa beans this year.

In the 2018/19 season, of the 812,000 metric tonnes of cocoa beans produced, local processors added value to 327,487.84.

Similarly, in the 2017/18 season, 311, 273.7, out of the 905,000 metric tonnes of cocoa beans, were processed by local processors.

Deputy Chief Executive of COCOBOD in charge of Operations, Dr Emmanuel Opoku told The Finder that the $200 million is part of a US$600 million credit facility secured from the African Development Bank (AfDB) to invest into the cocoa sector to increase national cocoa production.

He stated that COCOBOD has already received $200 million of the money and is set to receive another US$100 million on December 28, 2020.

Dr Opoku explained that COCOBOD last week concluded negotiations with AfDB to release the remaining US$300 million on March 6, 2021.

He noted that AfDB will only release the money based on agreements signed with local cocoa processors.

In view of the fact that the processors will have to apply and meet stringent conditions, including the provision of collateral, he said, the applicants have from now to February ending to meet all the requirements to pave way for the release on March 6, 2021.

According to him, the interest to be paid on the loans would be determined by the risks of each company.

To ensure that the money is put to good use, Dr Opoku said COCOBOD and beneficiary companies would fashion out an arrangement that after the products are sold, the regulator would get paid first before the rest goes to the company.

Even before the money will be released, he said, COCOBOD has been supplying state-owned Cocoa Processing Company (CPC) and West African Mills Company Limited (WAMCo), in which government holds 40% shares, and Plot Enterprise under similar arrangements.

Some local processors owe COCOBOD over US$100 million as they could not pay for beans supplied them.

The management of Cocoa Processing Company (CPC), the biggest debtor, has called on President Akufo-Addo to intervene on behalf of the company over a debt repayment of US$108 million owed to COCOBOD and Afreximbank.

The company is expected to pay COCOBOD a debt amount of US$88 million for the supply of cocoa beans.

In spite of the debts owed by local processors, Dr Opoku explained that studies have shown that local processors can be profitable, which informed COCOBOD’s decision to support the struggling companies.

He cited WAMCo, one of the struggling local processors, which posted US$2 million profit after its comeback within a period of one-and-a-half years, as an example that local processors can be profitable.

Other local processors include Olam, Niche Cocoa, Barry Callebaut, BD Associates, and Cargill.