COCOBOD intends to draw down the second tranche of the US$600 million medium term loan it secured from a consortium of lenders led by the African Development Bank, during the last week of this year. The US$100 million draw down will bring the total cumulative draw down to US$300 million, COCOBOD having drawn down an initial US$200 million in May. The other half of the loan –US$ 300 million will be drawn down in one go in March 2021, per the terms of the agreement.
The largest chunk of the financing is going into the rehabilitation of underperforming farms an effort which is already well underway. Altogether US$230 million is budgeted to rehabilitate diseased and moribund farms. Other interventions being financed by the loan include increase of cocoa plant fertility, improvement in irrigation systems, enhancing of warehousing capacity, promotion of both domestic processing and domestic consumption and creation of a farmers database.
Ultimately COCOBOD expects that within the next five to seven years, Ghana’s cocoa production should have increased to 1.5 million metric tonnes from about 900,000 metric tonnes currently.
Importantly the introduction of the US$400 per tonne Living Income Differential, negotiated by the governments of Ghana and Cote d’Ivoire for their respective cocoa farmers has raised enthusiasm among the farming populace. Indeed this coming into effect has enabled both governments to increase the farm gate price they offer by some 28 percent for the 2020/21 crop season which began last month.
Now COCOBOD is seeking to increase the area under productive cultivation and increase productivity per acre dramatically. This in turn would enable farmers to pay commercial rates for their inputs and extension services, which are currently subsidized by the Board under a financially unsustainable model.
This is where the loan comes in. The agreement for the financing was signed in 2019 by COCOBOD, African Development Bank, Credit Suisse AG and the Industrial and Commercial Bank of China.