Contrary to recent statements made by Joseph Boahen Aidoo, the Chief Executive of the Ghana Cocoa Board (COCOBOD), the annual cocoa syndicated loan has not been abandoned. Instead, the cocoa regulator is still in negotiations, albeit with plans to secure a significantly reduced loan of $600 million, down from the original target of $1.5 billion.
“Cocobod is not abandoning the cocoa syndication,” Finance Minister Mohammed Amin Adam told reporters in Accra on Monday, as reported by Bloomberg. He confirmed that while negotiations are ongoing, the loan amount will not exceed $600 million, leading authorities to seek alternative funding sources.
Just a week ago, COCOBOD’s CEO informed journalists that the regulator had decided to forego the annual cocoa syndicated loan, marking a break from a 32-year tradition. Mr. Aidoo claimed that this move was part of a strategy to wean the company off international lenders, a decision he said would save Ghana approximately $150 million in interest payments. However, the information presented by the COCOBOD CEO now appears to be inaccurate.
While COCOBOD had initially framed the decision not to pursue the syndicated loan in a positive light, the announcement had negative implications for the Ghanaian economy. The absence of the expected dollar inflow from the loan was anticipated to help stabilize the cedi in the second half of the year. Following the COCOBOD announcement, the cedi, which had been showing signs of recovery, resumed its depreciation against the dollar.
Analysts speculate that the Finance Minister’s clarification may have been an attempt to provide some positive news to the currency market, given the adverse effects of the initial announcement.
In addition to the revised loan negotiations, COCOBOD is also seeking to raise $500 million locally through the Olam Group and Barry Callebaut, two major buyers of cocoa beans. Olam Ghana was owed approximately $1 million from a transaction last December, and COCOBOD has agreed to settle this debt with cocoa beans of equivalent value.
Discussions regarding the $500 million local loan are ongoing. However, with lower-than-expected cocoa volumes in the 2023/2024 crop season and a reduced projection for the 2024/2025 season from 800,000 metric tonnes to around 650,000 metric tonnes, COCOBOD is facing challenges in convincing potential lenders of its ability to repay the loans in a timely manner.
