The Ghana Cocoa Board (COCOBOD) has assured farmers and other stakeholders that the raging coronavirus disease (COVID-19) will not halt ongoing processes to secure funds from international financial institutions to finance cocoa production and purchases in the 2020/21 cocoa season.
The Chief Executive Officer (CEO) of COCOBOD, Mr Joseph Boahen Aidoo, also told the Daily Graphic yesterday that although the pandemic had impacted the board’s operations, it would not affect its ability to borrow funds to finance next season’s cocoa production.
He said cocoa production, which was the basis of the syndication was ongoing, in spite of the partial lockdown of major cities in the country to help contain the spread of the virus.
The board normally uses the funds from the annual syndication exercise to purchase cocoa, which it then exports and uses the proceeds to repay the loan.
Mr Aidoo said the Cocoa Marketing Company (CMC) had been experiencing difficulties in selling the country’s cocoa, as most buyers and trade houses had closed their office due to the pandemic.
He, however, said the board was optimistic that a way would be found around the situation for sales to resume for the necessary guarantees to be secured against the season’s cocoa loan.
The CEO was speaking to the paper on the status of this year’s cocoa loan syndication, which has become an annual event that the global financial market looks forward to.
Mr Aidoo explained that although the spread of the virus and the subsequent restrictions worldwide had made it impossible for the board to hold formal meetings with its lenders and advisors on the loan syndication exercise, it was using alternative methods to lay the ground for the raising of the funds.
He mentioned video and telephone conferencing and the exchange of relevant documents through courier services as some of the strategies that the board was using.
Consequently, Mr Aidoo said the board was confident that this year’s transaction would be closed and signed in September to enable COCOBOD to access the funds for the purchase of cocoa from farmers.
“There is no need to panic because the syndication will surely happen,” Mr Aidoo said.
“Yes, we admit that there is a challenge; COVID-19 has slowed the process but we are on course and we are sure that by the time the season opens, the funds would have been ready,” he added.
The 2020/21 cocoa season is due to open in October next year.
Giving an update on the process, the CEO said the board had already opened discussions with the relevant institutions towards getting them to either facilitate or participate in this year’s cocoa syndication exercise.
He said the board was currently in the process of selecting financial institutions that will act as lead arrangers for the syndication of the funds from other lenders.
That, he said, should set the tone for a roadshow in August before the final signing off of the transaction in September, as had been the case every year.
Repayment of old loan
Although Mr Aidoo did not state the exact amount that the board would be borrowing this year, he said indications were that this year’s loan would be more than what was syndicated last year.
Last year, COCOBOD borrowed $1.3 billion from a consortium of international financial institutions, which it used to finance cocoa production and purchases in the 2019/2020 cocoa season.
The CEO said the repayment of that loan was in progress and would have ended by now had it not been for the COVID-19.
He added that the board had resumed shipment of cocoa beans to buyers in Asia after the restrictions on port activities there halted such transactions briefly.
Mr Aidoo said cocoa production and related activities were ongoing after the board included personnel in the sector in the list of essential service providers in the imposition of the ongoing restrictions, called lockdown.
Following that exemption, he said, the board had continued the carting of inputs such as fertiliser to cocoa farmers for application on their farms.
“Our expectation is that the farmers will use them in time to ensure that we get the desired results,” the COCOBOD CEO added.