About 10,000 workers with Cocoa Licensed Buying Companies (LBCs) have been sacked due to a directive by COCOBOD to accept seed-fund guarantees from only universal banks.
The directive which came into effect on January 16, 2014 was as a result of high default rate among some LBCs from non-universal banks. The development is said to be adversely affecting some LBCs, throwing them out of job.
According to the Progressive Licensed Cocoa Buyers Association (PLCBA), just a few LBCs are benefiting from the directive to the disadvantage of many.
The president of PLCBA Samuel Anane is questioning the ability of commercials banks to finance the huge capital the industry requires to facilitate operations.
“Our search is telling us that there is something wrong somewhere because if one LBC will be given 200 million, 300 million, 500 million where do they get their guarantees from, is it from our commercial banks, are they so liquidated to guarantee for 500 million, even if it is six banks or 10 banks they cannot make it.”
He added: “So we are thinking that COCOBOD should reverse this decision and give the leeway to the non-banking as well to support the industry so that the industry will not collapse because of financial difficulties”.
They want the Finance Minister, Seth Terkper, to immediately investigate the distribution of seed funds amongst LBCs. According to the association, the performance criteria used by COCOBOD is a wrong indicator.
“They are not being fair and for that matter we think that the government should investigate this matter for us … there is a way of allocating the seed fund amongst the LBCs, and it is not really good”.
Ghana has about 35 LBCs of which PLCBA members make up 14 of them and they account for about 10 percent of the cocoa beans purchased from the farmers.
However, COCOBOD is standing by its decision to accept guarantees from only credible commercial banks – even though the Central Bank stepped in to speak on behalf of some of the non-bank financial institutions (NBFIs).
The Public Affairs Manager of COCOBOD Noah Kwesi Amenyah told the B&FT: “COCOBOD has taken a loan that needs to be paid back, and the money must be used for its intended purpose of purchasing cocoa beans; no LBC should use that money for any other activity, because if you do so and cannot account for the money, then we can fall on your guarantors who should be in a position to pay”.
By Osei Owusu Amankwaah
