Parliament has given its approval for an $800 million loan agreement between the Ghana Cocoa Board (COCOBOD) and a consortium of banks and financial institutions. The purpose of this loan is to finance the purchase of cocoa beans for the upcoming 2023/2024 Crop Season.
Loan Agreement Details
Under this loan agreement, approximately 47 percent of the projected 850,000 tonnes of cocoa beans will be purchased from farmers through the Licensed Buying Companies for the 2023/2024 cocoa season. This will provide a significant boost to the cocoa industry in Ghana.
In response to recent reports by Reuters stating that COCOBOD had borrowed up to $200 million from cocoa traders to address its funding gap, COCOBOD has reassured stakeholders that it has taken concrete steps to secure sufficient funds for its annual cocoa purchases in the upcoming crop season.
COCOBOD has implemented a two-prong financing strategy to ensure that the necessary funds are obtained. The organization has received firm assurances from its bankers regarding the availability of funds in a timely manner for the purchasing season. Additionally, a "Cocoa syndicated Loan" has been presented to Parliament for consideration and approval.
The proposed disbursement of the 2023/2024 loan facility will be utilized for various cocoa-related operations. These include farmers' services costs such as cocoa diseases and pest controls, fertilizer distribution and application, farmer pension schemes, cocoa roads, and industry inputs like jute sacks, twine, stencil ink, and passbooks. The loan will also support child education initiatives and contribute to the overall development of the cocoa industry.
Furthermore, the loan will cover expenses related to payments to farmers, buyer's margin, hauler's margin, international marketing operations such as storage and shipping, disinfestation/grading and sealing costs, finance costs, COCOBOD and division costs, as well as other expenses like scale inspection and phytosanitary inspections. The loan will also support rehabilitation efforts and the planting of coffee and sheanut operations.
Significance of Loan Agreement
This loan agreement is a significant milestone for Ghana's cocoa industry. It will provide the necessary financial support to ensure the smooth purchase of cocoa beans from farmers, thereby contributing to the growth and sustainability of the sector. COCOBOD remains committed to its mandate of promoting the welfare of cocoa farmers and maintaining Ghana's position as a leading producer of high-quality cocoa beans.
Summary
The approval of the $800 million loan agreement by Parliament signifies a strong commitment to supporting Ghana's cocoa industry. With these funds, COCOBOD will be able to purchase a substantial portion of cocoa beans for the 2023/2024 Crop Season, benefiting both farmers and the nation as a whole.
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