Joseph Boahen Aidoo
Parliament yesterday approved a US$1.3 billion loan facility to enable the Ghana Cocoa Board (COCOBOD) purchase cocoa for the 2022/2023 crop season.
The credit facility, which is from a consortium of several international banks and financial institutions, will be used to purchase an estimated 850,000 tonnes of cocoa beans from farmers through Licensed Buying Companies for the crop season.
Part of the trade finance facility, guaranteed by the government, will be used for other operations of the COCOBOD within the period.
The House also approved a request by the Finance Minister to waive payment of the Stamp Duty amounting to Cedi equivalent of US$6.50 million on the loan amount required by the COCOBOD in line with the Stamp Duty Act 2005 (Act 689).
An interest rate of SOFR+ a margin of 1.75% per annum and a commitment fee of 35% of margin will be paid on the loan.
The agreement and the Stamp Duty waiver request were presented to the House on Tuesday, July 26, 2022, in accordance with Articles 181 and 174 (2) of the 1992 Constitution.
The Second Deputy Speaker, Andrew Amoako Asiamah, subsequently referred the facility and request to the Finance Committee and Leadership of the Committee on Food, Agriculture and Cocoa Affairs for consideration and report.
Background
A report of the Finance Committee said the cocoa industry has been the backbone of Ghana’s economic development over the years.
“The industry has over the years provided employment for millions of Ghanaians and serves as a major source of foreign exchange earner for the country,” it added.
Cocoa production in Ghana has also increased significantly since the 1999/2000 crop season, reaching an all-time high of over one million metric tonnes in the 2010/2011 and the 2020/2021 crop seasons.
The increase in the levels of production requires substantial financial resources to enable COCOBOD to finance the purchase of cocoa beans, the report noted.
To this end, the Syndicated Trade Finance arrangement was put in place in 1993 to enable the Ghana Cocoa Board secure a loan facility to finance cocoa purchases and for other payments each year.
Observation
The Committee noted that for the 2022/2023 crop season, cocoa production has been conservatively forecasted to be 850,000 tonnes.
It was explained that the projected figure was based on the trend of cocoa production over the past years and relevant agronomic practices being adopted by COCOBOD, the report intimated.
The Committee noted with satisfaction the pruning and other agronomic coverage of cocoa farms undertaken by the Ghana Cocoa Board, which in the opinion of the Committee would help significantly in the achievement of the production target set for the crop season, and encouraged COCOBOD to continue the fight against the Cocoa Swollen Shoot Virus Disease (CSSVD), expand the innovative irrigation of farms as well as other production enhancement programmes (PEPs).
By Ernest Kofi Adu, Parliament House