Minority says international banks reject COCOBOD’s $1.5 Billion loan request amid cocoa sector decline

The Minority in Parliament claims that international banks have rejected Ghana Cocoa Board’s (COCOBOD) request for a $1.5 billion prepayment loan to finance cocoa purchases for the 2024/2025 crop season.

This marks the first time in 32 years that COCOBOD’s loan request has been declined, according to a press statement signed by Minority Leader Dr. Cassiel Ato Forson and seen by Investment Times.

The statement highlights that in June 2024, COCOBOD issued a Request for Proposal (RFP) for the $1.5 billion loan aimed at purchasing up to 650,000 metric tonnes of cocoa.

However, the request failed to attract interest from international banks, which the Minority attributes to COCOBOD’s deteriorating financial health and the broader collapse of the cocoa sector under current management.

The Minority notes that cocoa production, which stood at 969,000 metric tonnes during the 2016/2017 crop year inherited from the NDC government, has plummeted to just over 400,000 metric tonnes for the 2023/2024 season.

The sharp decline in production over the past eight years, coupled with what the Minority describes as mismanagement of the sector, has severely impacted COCOBOD’s ability to meet its contractual obligations.

The caucus further contends that COCOBOD is unable to supply approximately 250,000 metric tonnes of cocoa and has had to roll over these obligations due to poor sector management. This situation, they argue, has led to COCOBOD’s loss of credibility, rendering it no longer creditworthy in the eyes of the international banking community.

The Minority asserts that banks doubted COCOBOD’s ability to meet the projected 650,000 metric tonnes for the 2024/2025 crop year, particularly given that 250,000 metric tonnes would be required to service rolled-over contracts. This leaves only 400,000 metric tonnes to fulfill obligations for the new crop year, raising concerns about COCOBOD’s ability to repay the loan, which led to the banks’ refusal to participate.

Additionally, the Minority highlights that COCOBOD has recorded consecutive losses for seven years under the Akufo-Addo/Bawumia administration, amounting to over GHS 11 billion. The losses include GHS 395 million in 2017, GHS 78.2 million in 2018, GHS 320.6 million in 2019, GHS 426 million in 2020, GHS 2.4 billion in 2021, GHS 3.2 billion in 2022, and GHS 4.2 billion in 2023.

The Minority dismisses COCOBOD’s announcement that it has chosen not to borrow from foreign banks after 32 years as “false, unmeritorious, contrived, and face-saving.”