Parliament has approved a $1.2 billion loan facility for the Ghana Cocoa Board (COCOBOD) for the purchase of cocoa beans for the 2013/2014 crop season.
The credit facility is an arrangement between the Ghana COCOBOD and a consortium of several international and local banks with the Government of Ghana as the guarantor.
The facility is to enable COCOBOD to raise funds to purchase 830,000 tonnes of cocoa from farmers for the crop season.
The lenders include the Bank of Tokyo-Mitsubishi UFJ, Credit Agricole Corporation and Investment Bank, First Rand Bank Limited, Nedbank Limited and Societe General.
According to the report of the Finance Committee of Parliament, the sourcing of the facility also provides the country with adequate opportunity to demonstrate its good track record on borrowing from the international financial market.
The syndicated trade-backed facility will cost COCOBOD $14.08 million. This is made up of interest margin, fees, legal cost, interest on cash collateral, among others. It, however, excludes an estimated legal cost of $75,000.00.
The Minority side, on the other hand, raised concern about the late presentation of the facility to Parliament for approval.
The paper was laid before the House on Friday, July 19, 2013 and approved the same day before the House ended the Second Meeting of the First Session of the Sixth Parliament of Fourth Republic.
Parliament also approved a request to waive stamp duty on the loan.
The cocoa industry has contributed significantly to the economic development of Ghana over the years.
In 2010, cocoa contributed about a quarter of the Gross Domestic Product (GDP), with the industry creating employment for millions of Ghanaians and has served as a major foreign exchange earner for the country over the years.
Cocoa production has also increased significantly since the 1999/2000 crop season, reaching an all-time high of one million metric tonnes in the 2010/2011 crop season.
The increase in the levels of production requires substantial financial resources to enable the COCOBOD to finance the purchase of the cocoa beans; that was why the offshore syndicated trade finance arrangement was put in place in 1994 to secure a loan facility for that purpose.