Chief Executive of Ghana Cocoa Board, Joseph Boahen Aidoo
The Ghana Cocoa Board (COCOBOD) has announced it will not go for a syndicated loan this year to finance the purchase of cocoa beans for the 2024/2025 cocoa season. This it says is part of its effort to ensure that COCOBOD is financially independent so that it will not depend on loans to finance its cocoa purchases.
The Chief Executive of COCOBOD, Joseph Boahen Aidoo is reported to have said; “for the first time in the history of COCOBOD, we want to wean ourselves from the offshore syndication. We want to self-finance this year’s cocoa purchases. Since 1992, COCOBOD has always gone offshore to borrow from a consortium of banks and 32 years is quite a good time for any human being to learn his or her lessons.”
The NPP is not known for seeing an opportunity to borrow and runs away from it. It is surprising to many hearing this strong shift from the government’s long romance with debt.
Remember, this government has borrowed to a certain point that we are no longer able to pay our debt. We went to the International Monetary Fund (IMF) in a wheelchair seeking a bailout programme. This resulted in the government embarking on a debt restructuring programmme where both internal and external creditors suffered severe haircuts on their principals.
When the Nana/Bawumia government borrowed the economy into crisis and we were downgraded by the credit rating agencies and as a result we were shut out of the capital markets for the first time since we started issuing bonds, the President did not take this lightly with the credit rating agencies, calling them reckless. In May 2021, he proceeded to seek debt cancelation so he could keep borrowing more but was not paid any attention.
"Without the ‘fiscal room to breathe,’ Africa could truly become ‘the forgotten continent,’ and that is why there is an urgent need for comprehensive debt relief and debt cancellation,” President Akufo-Addo stated at a Summit on Financing African Economies, in Paris, France.
Remember also, this government threw a kenkey party for successful borrowing. It was to celebrate Ghana’s successes in the issuance of Eurobond abroad raising some $3 billion for various projects, completion of the IMF-ECF programme signed by the Mahama administration, and the slight appreciation of the cedi. The NPP was and has always been very comfortable with borrowing.
The Minority Leader, Cassiel Ato Forson's persecution in the law court for ambulances purchased under the Mahama administration was largely seen by many critical minds as his determined effort to ensure that the Nana/Bawumia government did not borrow us into debt crises. We have witnessed several recalls of parliament to approve loan agreements for Nana/Bawumia to keep spending lavishly.
We must also remember the collateralization of the Energy Sector Levies Act (ESLA), Ghana Education Trust Fund (GETFund), and other key and promising revenue handles of the government for loans. Taxes resulting from these important tax handles do not go to the government to address the critical needs of the masses but are used to service these loans with some going to be in the books for a long period of 10 years or more.
These few instances are narrated to give you a fair understanding of how the romance between the NPP government and debt is so strong and never will end unless they are voted out. So the COCOBOD’s decision not to borrow is not from the heart but something else they will not say. How possible will it be for the monkey to chase the dog or for the mouse to chase the cat? For COCOBOD to say no borrowing means that the mouse must have been chasing to devour the cat.
An ailing company like COCOBOD will not be accepted by any lender for a loan. Instead of them saying they had searched all the places but no loan, they opted to lie to us with the frivolous claim of seeking financial independence.
COCOBOD’s output for the last 7 years of this administration has been worse in the country’s history. Having reached a record output of 1 million metric tons in the 2020/2021 season, cocoa production sharply declined to 683,269 metric tons for the 2021/2022 season and further declined to 656,140 metric tons in the 2022/2023 cocoa season and is expected to decline even further to 492,000 metric tons, about 40 percent below a target of 820,000 metric tons for the 2023/2024 cocoa season.
The uncertainty surrounding COCOBOD's ability to buy more cocoa beans to finance any loan is one major reason accounting for its failure to enter the loan market for the 2024/2025 cocoa season.
Additionally, COCOBOD has been unable to pay back its most recent offshore syndicated loan. This is further fueling the hesitation of international banks to give any money to COCOBOD. Before its failure to pay back its loans, COCOBOD was borrowing at much higher interest rates, reaching a staggering 8 percent.
Historically, COCOBOD had secured offshore syndicated loans at interest rates as low as 1.5 percent as of 2016, a testament to its financial credibility in the global cocoa industry. The rise in the interest rate is a testament that lenders do not trust COCOBOD to pay back and they have been proven right.
COCOBOD has been deliberately mismanaged into insolvency and liquidity crises by this government. First is the seizure of cocoa farms for illegal mining and second is the unfair and uncompetitive prices offered to cocoa farmers for the purchase of their cocoa beans thereby creating room for smuggling to flourish.
No bank will be willing to lend money to COCOBOD after carefully scrutinizing its financial statements. The Nana/Bawumia administration has run down a giant, known globally for its position and expertise in the cocoa industry. Unless a change of government, COCOBOD cannot redeem itself of the severe damage visited on its reputation.
