International banks reject COCOBOD's loan request

The Minority in Ghana's Parliament has voiced concerns over COCOBOD's financial viability, stating that foreign banks had turned down the organisation's request for a loan to purchase cocoa for the 2024/2025 harvest season. 

According to the Minority, this development is a reflection of global financial institutions' eroding trust in COCOBOD under its current leadership.

The Minority contended that the loan denial reflects COCOBOD's mismanagement and poor financial judgments in recent years. 

They highlighted that COCOBOD has usually relied on offshore syndicated loans to finance the purchase of cocoa beans, but the rejection by foreign banks this time indicates a lack of faith in the organization's capacity to handle its finances competently.

COCOBOD's Chief Executive Officer, Joseph Boahen Aidoo, has indicated that, for the first time in three decades, the organization will not seek offshore syndicated loans to fund the purchase of cocoa beans during the 2024/2025 crop year. 

COCOBOD announced that it intends to fund the acquisition exclusively from its own funds, with a target purchase of around 650,000 metric tons of cocoa beans.

However, in their statement, NDC MPs emphasized that this scenario might have major consequences for Ghana's cocoa sector, which is an important element of the country's economy. 

They cautioned that without the right funding, COCOBOD may fail to reach its cocoa purchasing targets for the coming season, consequently jeopardizing cocoa producers and the entire economy.

"For the first time in 32 years, International Banks have rejected Ghana Cocoa Board’s (COCOBOD) request for a prepayment loan to finance the purchase of cocoa."

"In June 2024, COCOBOD issued a Request for Proposal of $1.5 billion loan to purchase up to 650,000 metric tonnes of cocoa for the 2024/2025 crop year.

But this request did not attract any interest from the international banks due to the poor health of COCOBOD and the collapse of the cocoa sector under its present management."

"From a production level of 969,000 metric tonnes inherited from the NDC in the 2016/2017 crop year, cocoa production has declined to just a little over 400,000 metric tonnes for the 2023/2024 cocoa season.

The significant decline in cocoa production in the last eight years and the mismanagement of the cocoa sector have impacted COCOBOD’s ability to meet its contractual obligations," an excerpt of the statement read.

Source: Lead News Online