Parliament yesterday approved the terms of a $2 billion facility for the purchase of cocoa beans in the country for the 2016/2017 crop season.
The trade facility is to enable the Ghana Cocoa Board (COCOBOD) to raise adequate funds to buy cocoa beans from farmers through licensed buying companies.
The trade finance facility is between the COCOBOD and a consortium of banks and financial institutions, with the government as guarantor.
The House also approved a waiver of stamp duty of up to $10 million on the trade facility.
The request for the approval of the trade facility was presented to the House by a Deputy Minister of Finance, Mr Casiel Ato Baah Forson, on May 17, 2016, and was subsequently referred to the Finance Committee of Parliament for consideration and report.
The approval by the House yesterday followed the presentation of the report on the trade facility by the committee.
Terms of the facility
The lenders are Deutsche Bank, Natixis, Nedbank Limited of South Africa, Standard Chartered Bank, Societe Generale (SG), The Bank of Tokyo-Mitsubishe UFJ Limited with DZ as co-arranger.
The commitment fee is 35 per cent on interest margin, the flat fee (participation and arrangement) is 0.725 per cent and legal fees and other expenses of $66,000.
Importance of facility
Reading the report, the Chairman of the Finance Committee, Mr James Klutse Avedzi, said the committee noted that the cocoa industry had over the years remained a major contributor to Ghana's economic growth and transformation.
He said the approval of the facility was necessary to enable COCOBOD to finance the purchase of cocoa for the 2016/2017 crop season and for other payments to stakeholders.
He said COCOBOD had projected to buy about 900,000 metric tonnes of cocoa for the 2016/2017 crop season.
On the waiver on stamp duty, Mr Avedzi said the Stamp Duty Act made it imperative for COCOBOD to pay a stamp duty of 0.5 per cent of the loan amounting to $10 million
Therefore, he said, the waiver was necessary "to ensure that the full value of the facility is available to the COCOBOD to enable it to purchase the required cocoa beans and provide some resources to meet other obligations’’.
Deputy Finance Minister
Mr Forson told Parliament that as of May 31, 2016, COCOBOD had purchased 709,000 metric tonnes, and projected to buy 830,000 metric tonnes by June, 2016.
He said COCOBOD further projected to purchase between 40,000 and 50,000 metric tonnes during the light crop season.
"The cocoa season would be ending in September, and their projection was between 850,000 and 880,000 metric tonnes. This means that we will be in the position to service the debt as and when they fall in," he said.
The Member of Parliament for Abuakwa South, Mr Samuel Atta Akyea, expressed concern at the local legal fees of GH¢88,951 in the facility.
He said he did not understand why the legal department of COCOBOD or the Attorney-General's Department was not consulted to do the legal work rather than give the contract out at a great cost to the state.
Mr Atta-Akyea said those who approved such an arrangement should be surcharged.
The Minority Leader, Mr Osei Kyei-Mensah-Bonsu, said the $35.7 million estimated cost for securing the loan was too colossal.
"There should be a breakdown, and we should satisfy ourselves as a House as to whether there is any merit in having such a colossal amount as the estimated cost for procuring the facility," he demanded.
But the Majority Chief Whip, Alhaji Mohammed Mubarak, disagreed with the Minority Leader, and indicated that the $35.7 million estimated cost for securing the loan "is the cheapest that you can find".
For instance, he said even the Eurobond of $1 billion secured by the government had an interest of more than $100,000.