Parliament Wednesday approved a loan agreement between the Ghana Cocoa Board (COCOBOD) and a consortium of international and local banks for an amount of $1.8 billion for the purchase of cocoa beans for the 2015/ 2016 crop season.
The banks are Barclays Bank Plc, Commerzbank, Aktiengesellschaft, Deutsche Bank AG, Natixis, Standard Bank Group of South Africa and Sumitomo-Mitsui Banking Corporation.
Standard Chartered Bank is the arranger of the facility and the government of Ghana the guarantor.
The loan will enable the company to purchase 900,000 metric tonnes of cocoa for the season.
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Justification for the loan
The facility is to enable COCOBOD to raise adequate funds to purchase cocoa beans from farmers through Licensed Buying Companies for the 2015 / 2016 cocoa season.
The sourcing of the facility also provides the nation with the opportunity to demonstrate its good track record on borrowing from the international finance market.
The cocoa industry has been the backbone of Ghana's economic development over the years.
The industry has created employment for millions of Ghanaians and serves as a major source of foreign exchange earner for the country.
Cocoa production in Ghana has also increased significantly since the 1999/ 2000 crop season, reaching an all-time high of more than one million metric tonnes in the 2010/ 2011 crop season.
The increase in production levels requires substantial financial resources to enable COCOBOD to finance the purchase of cocoa beans.
To that end, the offshore syndicated trade finance arrangement was put in place in 1993 to enable COCOBOD to secure a loan facility to finance cocoa purchases and for other payments each year.
COCOBOD is, however, required by the Stamp Duty Act, 2005 (Act 689) to pay one per cent as tax on the facility.
The request for Parliamentary approval was also being sought for the waiver of the payment of the stamp duty on the facility.
Finance Committee's views
Presenting the report of the Finance Committee of Parliament on the facility, the Chairman of the committee, Mr James Klutse Avedzi, urged the House to approve the loan.
He said it would enable the company to raise the needed funds to purchase cocoa for the season.
"Further, the approval of the waiver will also allow COCOBOD to use the entire syndicated facility for cocoa purchases and other related uses," he said.