Parliament Okays $1.3Billion Cocoa Syndicated Loan


Ghana’s legislators have approved a $1.3 billion syndicated loan facility for the purchase of cocoa beans for the 2022/2023 crop season by the Ghana Cocoa Board (COCOBOD).

The facility will enable COCOBOD raise funds to purchase an estimated 850,000 tonnes of cocoa beans from farmers through Licensed Busying Companies in the country and also finance other operations of the board for the year under consideration.

The terms of a receivables-backed trade finance facility is between COCOBOD and a consortium of banks and financial institutions, with the government of Ghana as guarantor.

 Parliament also approved the waiver of stand duty amounting to the cedi equivalent of $6.5 million on the arrangement to finance cocoa purchase for the same period.

Terms of facility

The facility comes with an interest rate margin of 1.75 per cent per annum, a commitment fee of 35 per cent of margin, arrangement and participation fee of 1.25 per cent flat and security margin of assignment of cocoa contracts for 112 per cent of facility amount as well as best effort of $740 million.

Repayment of the principal is to be effected by seven monthly equal instalments, beginning February 2023 and ending August 2023.

The facility was presented to the House on July 26, 2022 and it was referred to the Finance Committee for consideration and report.


Chairman of the finance committee, Kwaku Kwarteng, moved the motion for the approval and presented the committee’s report to the House.

The cocoa industry had been the backbone of Ghana’s economic development over the years, cocoa production in the country had increased significantly since the 1999/2000 crop season, reaching an all-time high of over a one million metric tonnes in the 2010/2011 and the 2020/2021 crop seasons. 

The committee’s report noted that increase in the levels of production required substantial financial resources to enable the COCOBOD to finance the purchase of cocoa beans from farmers.

The syndicated trade finance arrangement was put in place in 1993 to enable the COCOBOD secure a loan facility to finance cocoa purchases and for other payments each year. 

“To enable the COCOBOD purchase cocoa for the 2022/2023 crop season the board of directors of the COCOBOD and the President have given approval for the COCOBOD to borrow an amount of $1.3 billion,” the reported stated.


The facility will be drawn down in two installments–$910 million in October 2022 and $390 million from November 2022 to February 2023–based on the operational needs of COCOBOD.

When the committee sought to know whether the African Development Bank (AfDB) facility of $600 million approved by the House and signed in 2019 had been drawn down by the board, it was informed that $350 was drawn down from the facility to undertake cocoa Productivity Enhancement Programmes (PEPs), it said.

“These programmes include farm irrigation, hand pollination, rehabilitation and rehabilitation of moribund farms. 

“These critical activities are aimed at ensuring sustainability of the industry and improved yields in the medium to long term,” the report said. 

As to when the remaining $250 million would be drawn down, the committee was informed that the undrawn amount had been cancelled due to uncertainties with crop forecast, unfavourable price and the need for COCOBOD to focus on rehabilitation programme, the report said. 

Worse loan 

Supporting the motion, the Ranking Member of the Finance Committee, Dr Cassiel Ato Forson, said it was untenable for anyone to oppose a loan that sought to help COCOBO to raise money for cocoa purchase.

That, he said, would the board to raise revenue for the purposes of buying cocoa.

He, however, said for the first time since the board started borrowing for the past 30 years, the board had been struggling to raise the syndicated facility.

He said while the interest rate on the $1.3 billion was cheap, per the COCOBOD’s history of borrowing, the loan happened to one of the worst loans that they had had.

“Mr Speaker, it will surprise you to know that even though they are going to borrow $1.3 billion, so far, the lenders have committed only $560 million to give to Ghana.

“The lenders informed COCOBOD that the remaining $740 million will be on best effort basis which means that they will try their best to see if they can raise the money for COCOBOD,” he said.

He added that in the past, the security margins for syndicated loans had been 100 per cent but “today, the security margin is 120 per cent of the facility amount which clearly indicates that Ghana’s risk has deteriorated,” he indicated.

Unsustainable debt

Dr Forson further told the House it was confirmed at the committee that COCOBOD, apart from the already approved loans it had, had gone to borrow GH₵ 14 billion from the ordinary market.  

He said when the Finance Committee met with the IMF recently, the GH₵14 billion featured heavily as the IMF “informed us that they are particularly concerned with COCOBOD’s GH₵14 billion cocoa bills”. 


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