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House approves $1.3bn loan for COCOBOD to purchase cocoa beans

Parliament yesterday approved a US$1.3 billion syndicated loan facility for the Ghana Cocoa Board (COCOBOD) for the purchase of cocoa beans from farmers and to finance other operations of the Board for the 2020/2021 crop season.

The House also approved a US$6.5 million request for waiver of stamp duty on the receivables-backed trade finance facility between the Board and consortium of banks and financial institutions in line with provisions of the Stamp Duty Act, 2005.

With the interest rate pegged at one month libor plus 1.75 per cent per annum, the commitment fee for the facility is 0.62 per cent per annum and upfront fees 1.25 per cent flat.

Based on the operational needs of the Board, the facility is expected to be drawn down in two tranches – October 2020 and latest by February 2021.

Repayment of the principal is to be effected by seven monthly equal instalments beginning February 2021 and ending August 2021.

The operational areas for the disbursement of the facility include cocoa disease and pest control, fertiliser distribution and application, farmers’ wards’ scholarship, cocoa roads, industry inputs, rehabilitation, replanting and child education support.

Share of the net Free On Board (FOB); the indicator of when a buyer or seller becomes liable for goods being transported on a vessel, on the other hand include buyers’ margin, haulers’ margin, storage and shipping operations, disinfection, grading and sealing finance cost.

The Finance Committee’s report on the facility, signed by its Chairman and Member of Parliament (MP) for New Juaben South, Dr Mark Assibey-Yeboah, indicated that the projected cocoa tonnage for the year under review was expected to be 900,000.

According to the report, GH¢661.3 million has been earmarked for the fertilisation of cocoa farms across the country; a drop from the GH¢880.8 spent on the same activity in the 2019/2020 season in which only 850,000 tonnes of cocoa were realised.

This incoherence, the Committee report said was explained by officials of the Board that “best agronomy practices require that cocoa fertilisation takes a break after every three years, hence fertiliser application for the 2020/21 season has been optimally assessed taking into consideration the level of fertiliser application for the past three years.”

Dr Assibey-Yeboah who moved the motion for the approval underscored the importance for the sector to the economy of the country hence the need for the facility for the Board to undertake its activities for the year under review.

“The industry contributes significantly to the Gross Domestic Product, employs an estimated two million people along the value chain and remains a major source of Ghana’s foreign exchange earnings.”

Seconding the motion, a member of the Finance Committee, Governs Kwame Agodza, said “cocoa is very critical to the health of Ghana’s economy. Indeed the amount of time and resources we put into oil exploration, perhaps if we applied those amount of resources to cocoa and the agriculture sector, we might be better off.”    

He urged that the facility was channelled to the purposes for which it was procured for the betterment of cocoa farmers in particular and the country at large.

BY JULIUS YAO PETETSI

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