Ghana to borrow $400m from cocoa traders as foreign banks delay loan

Ghana is seeking to borrow $400 million from cocoa traders to finance industry operations amid a government-debt restructuring.

According to Bloomberg on Tuesday, Ghana’s industry regulator, Cocoa board (Cocobod), is tapping traders for funds while the country is struggling to get loans from international banks.

Some of the cocoa firms include Olam Group Limited and Barrry Callebaut AG to pre-finance seedlings, chemicals, fertilisers and purchases of beans from farmers in the 2023-2024 season.

Speaking on the loans on Tuesday, Fiifi Boafo, Cocobod’s public affairs manager, in a Reuters report, said the industry has borrowed between $150 million and $200 million from cocoa traders due to a delay in securing a bank loan.

He also said Cocobod plans to borrow $1.2 billion for this season, of which $800 million will come from a syndicate of lenders and $400 million from other sources.

“But as the syndication process dragged on, it turned to traders to plug the funding gap. The funds will be repaid with the season’s harvest,” Boafo said.

“We engaged with some of the buyers to give us capital for some of the purchase so that the capital is taken care of when we supply them the beans.”

Boafo further said the parliament would start approval processes for the agreements on the $800 million syndicated loan this week, after which Cocobod will reach out to partner banks for signing.

Ghana is forecast to produce 850,000 tons of cocoa this season, up from a 13-year low of 683,000 tons in the period that ended in September.

In May 2023, the International Monetary Fund (IMF) executive board approved a three-year extended credit facility (ECF) arrangement of $3 billion for Ghana.