Founder and Leader of the Movement for Change, Alan John Kwadwo Kyerematen, has announced plans to abolish Cocoa Syndication Loans in favor of local currency securities if elected.
In a Facebook post on May 27, 2024, the presidential candidate pledged to overhaul the current cocoa external loan syndication arrangements and issue domestic securities denominated in the local currency if he wins the December 7 elections.
“I’ll Abolish Cocoa Syndication Loans in Favor of Local Currency Securities. As President, I will overhaul the existing cocoa external loans syndication arrangements for the purchase of cocoa and instead issue domestic securities denominated in our local currency,” he stated.
In November 2023, Parliament approved an $800 million cocoa syndicated loan for the Ghana Cocoa Board (COCOBOD). The approval followed a recommendation from the Finance Committee, allowing COCOBOD to finalize agreements with participating banks.
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Lawmakers were informed that COCOBOD would pay nearly 8% interest, which includes the one-month Secured Overnight Financing Rate (SOFR) of around 5.3% and a margin of 2.65%.
Despite a 63.5% increase in the price per bag of cocoa beans to incentivise farmers and improve yields, Ghana’s economic crisis and the need to restructure domestic and external debt limited the loan amount to $800 million instead of the expected $1 billion, causing delays in bean purchases. According to Bloomberg, this is the costliest syndicated loan COCOBOD has secured since 1992-93.
Illegal mining activities and the sale of cocoa farms to illegal miners have further threatened cocoa yields, raising concerns about smuggling and hoarding. To address the shortage, COCOBOD authorized the importation of 3,500 metric tonnes of cocoa beans from Cote d’Ivoire and Nigeria. In response, Ivory Coast’s Cocoa Council (CCC) urged cooperatives and buyers to sell their stocks to exporters within 21 days to prevent market instability.
