The Ghana Cocoa Board (COCOBOD), has finally signed the much anticipated US$1.8 billion loan intended to pay cocoa farmers and boost the FX regime.
This means that, the consortium of local and international banks who participated in the deal have reposed confidence in the country’s economy and the cocoa sector in particular to purchase cocoa beans in the 2015/16 cocoa season.
The board is said to have sealed the deal last week in Paris, France, where the Chief Executive Officer of COCOBOD, Dr Stephen K. Opuni, and the participating banks signed the agreement to pave way for the transfer of the money to Ghana.
In attendance was Deputy Minister of Finance, Mr Cassiel Ato Forson, and Ghana’s High Commissioner to the United Kingdom, Mr. Victor Smith.
We are aware the amount will fund the purchase of some 850,000 tonnes of cocoa beans from licensed buying companies (LBCs) in the ongoing season.
As the country’s cedi remains unstable against the dollar, we hope the transfer of the money from the lenders to the Bank of Ghana (BoG), will help cushion the country’s gross reserves, while helping stabilize the local currency from its depreciation.
Some reports indicate that the facility was oversubscribed by 44 per cent (total of US$2.6 billion) and that would have attracted the same interest of 1.19 per cent.
The oversubscription of the loan comes in the wake of a grim outlook in the global financial market which has impacted negatively on international transactions.
We believe the confidence demonstrated in Ghana’s economy by these international banks is a step we can build on to call on global players to take part in Ghana’s economic transformation.
As the Ministry of Finance plans to raise US$1.5 billion through a Eurobond that would mature in 10 years, we hope the investor confidence will still be high to generate enough participation.
We are saying this because the 2014 Eurobond, which was $1 billion, attracted a rate of 8.78 per cent which relatively, was high.
There is no doubt that the COCOBOD has a huge reputation in the international market, hence, the oversubscription, however, we must be careful with the Eurobond since that attracts a higher cost of payment.
We want to urge COCOBOD to utilize the fund profitably since per the agreement, they must finish repaying the loan before September 2016, the time the board will go back for a new loan.
It’s a delight to say that globally, financial experts have long praised COCOBOD’s syndication process as one of the best long-running commodity-backed deals that continues to attract interest from dozens of financial institutions worldwide.
We as Ghanaians must be proud of some of these positive signs and build on previous trusts to attract investors.
