On Tuesday, November 12 2019, the African Development Bank (AfDB), Credit Suisse AG, the Industrial and Commercial Bank of China Limited (ICBC) and Ghana Cocoa Board (COCOBOD), signed a $600 million loan to boost cocoa productivity in Ghana.
The deal will kick start the processing of a $600 million syndicated receivables backed term loan, that will boost cocoa productivity in Ghana. Ghana happens to be the world’s second-largest cocoa producer.
Ghanaian President, Nana Addo Dankwa Akufo-Addo, the President of AfDB Dr. Akinwumi A. Adesina, senior officials from Credit Suisse and ICBC, oversaw the signing of the facility, at a ceremony held at the 2019 Africa Investment Forum (AIF).
Prior to the agreement, COCOBOD did not have access to long-term debt capital. This is, however, a demonstration of AIF’s ability to raise much-needed financing, including from international commercial financiers, for projects in Africa.
At a press conference following the signing, President Akufo-Addo said the agreement would help to ensure higher incomes for Ghana’s cocoa farmers. The government has been looking for a mechanism to scale up the value chain of farmers, and that’s how AfDB came into place.
Credit Suisse is acting as a Joint Commercial Underwriter and Book runner to structure and fund a dual-tranche facility comprising a $250 million, 7-year DFI tranche with the Bank, as well as a $350 million, 5-year commercial tranche.
Despite accounting for over 60 percent of the global supply of the chocolate ingredient, the Ghanaian government remain largely at the mercy of world price fluctuations.
Unlike oil, which can be easily stockpiled by exporting nations, cocoa is a perishable commodity that declines in quality and value with time. The last time the price of cocoa collapsed, Ghana lost $1 billion. The loan will, however, prevent such amount of loss in the country.
COCOBOD will use the loan to raise cocoa yields per hectare that will increase Ghana’s overall production. These include financial interventions to sustain increased cocoa plant fertility, improving irrigation systems and rehabilitating aged and disease-infected farms.
It will also help increase warehouse capacity and provide support to local cocoa-processing companies.
Ghana’s cocoa sector employs 800,000 rural families and produces crops worth about $2 billion in foreign exchange annually. COCOBOD is a fully state-owned company solely responsible for Ghana’s cocoa industry, controlling the purchase, marketing and export of all cocoa beans produced in the country
The Africa Investment Forum, an initiative of the African Development Bank(AfDB) is an innovative, multi-stakeholder transactional marketplace, dedicated to raising capital, advancing projects to a bankable stage, and accelerating financial closure of deals.
However, ensuring that Africa gets to the top of the value chain is one of the AfDB’s top priorities, President Adesina said, adding that Africa could become a global hub for cocoa and cocoa-based products.
According to the President of AfDB Dr. Akinwumi A. Adesina, “All cocoa-producing countries will get similar support (from the Bank). Ghana is bankable, cocoa is bankable and of course Africa is bankable.”
By Faith Ikade