Consortium give first tranche of US$600m syndicated loan to COCOBOD

Japan International Cooperation Agency (JICA),the African Development Bank and other Development Finance Institutions (DFIs), have begun disbursement of a US$600 million credit facility for COCOBOD’s Productivity Enhancement Programmes (PEPs). The first tranche is US$200 million.

In November 2019, a consortium of DFIs and commercial lenders signed a US$600 million syndicated receivables-backed loan facility with Ghana Cocoa Board (COCOBOD), to boost cocoa productivity in Ghana.

The consortium comprises JICA, African Development Bank (AfDB), Development Bank of Southern Africa (DBSA) and Cassa Depositie Prestiti Spa (CDP), and commercial finance agencies such as Credit Suisse AG’s London Branch and the Industrial and Commercial Bank of China’s London branch.

COCOBOD’s CEO, Joseph Boahen Aidoo said: “As the second largest cocoa bean producing country in the world, Ghana fulfills a major part of supplying the demand around the world.”

He however admitted that there are challenges with the country’s cocoa production, as well as with the systems in place for the processing and the distribution of cocoa.

“By strengthening the cocoa bean-centric agricultural value chain and related industries, the finance will help COCOBOD to contribute to achieving SDG Goals 1 (no poverty), 8 (decent work and economic growth) and 12 (responsible consumption and production),” he stated.

COCOBOD is expected to use the facility to raise cocoa yields per hectare and increase Ghana’s overall production. These include financial interventions to sustainably increase cocoa plant fertility, improve irrigation systems, and rehabilitate aged and disease-infected farms.

The funds will also help increase warehouse capacity and provide support to local cocoa-processing companies.

Chief Representative of JICA Ghana, Yasumichi Araki said, “At the 7th Tokyo International Conference on African Development (TICAD7) in 2019, JICA and AfDB agreed to provide US$3.5 billion in joint financing under the fourth phase of the Enhanced Private Sector Assistance for Africa Initiative (EPSA4). This loan marks the first time JICA and AfDB will be providing direct co-financing under EPSA4 as well as first non-sovereign project.”

JICA’s cooperation with COCOBOD began in 2014, which saw support to capacity building for its quality control laboratory staff in advanced techniques for testing pesticide residue in cocoa beans. Cocoa is one of the most essential import commodities of Japan, and Ghana’s cocoa accounts for about 80 percent of all cocoa beans imported into Japan.

It is JICA’s hope that this loan facility will assist COCOBOD to implement the Productivity Enhancement Programs (PEPs) more efficiently and sustainably, to meet its expected goals.

Also that there will be increased yield of cocoa as cocoa farmers benefit from this nationwide program. More importantly, apart from JICA’s US$100 million contribution to this syndicated loan, it is also considering another technical cooperation to COCOBOD to support the success of PEPs implementation.

Ghana’s cocoa sector employs over 800,000 rural families and produces crops worth about US$2 billion in foreign exchange annually.