Dr. John Kwakye, Director of Research at the Institute of Economic Affairs (IEA), has endorsed the Ghana Cocoa Board’s (COCOBOD) decision to abandon syndicated loans for cocoa purchases.
Dr. Kwakye criticized the syndicated loan approach as flawed and advocated for innovative funding.
COCOBOD CEO Joseph Boahen Aidoo recently announced that for the first time in thirty years, the board will not seek offshore syndicated loans to finance cocoa bean purchases for the 2024/2025 crop season.
Instead, COCOBOD plans to use internal resources to fund the procurement of approximately 650,000 metric tonnes of cocoa beans, down from an initial target of 810,000 tonnes.
Aidoo explained that the decision to self-finance stems from the high costs associated with syndicated loans, citing nearly $150 million in interest payments last year alone.
“We have learned our lessons and decided it’s time to wean ourselves from offshore markets,” Aidoo said.
In response, Dr. Kwakye praised the move and suggested a more sustainable approach.
On his X platform, he proposed that the Bank of Ghana could finance COCOBOD’s cocoa purchases at a moderate interest rate, reimbursed through export proceeds.
“The syndicated loan was already flawed and unnecessary. Let’s think outside the box.
Why don’t we ask the Bank of Ghana to fund cocoa purchases? The Bank will charge a moderate interest rate and be reimbursed from the proceeds of cocoa sales,” Dr Kwakye stated.
