Narrative
Full Description
Project narrative
On December 12, 2023, a consortium of at least 6 financial institutions — including Bank of China, Coöperatieve Rabobank U.A., MUFG Bank, Ltd., Natixis S.A., Société Générale S.A. and Banque Arabe pour le Développement Économique en Afrique (BADEA)— finalized a $800 million receivables-backed trade finance facility (loan) agreement with Ghana Cocoa Board (COCOBOD), a state-owned enterprise and the world's second largest cocoa producer, for purchasing cocoa from farmers during the 2023/2024 crop season. The borrowing terms included a 8-month repayment period and an interest rate of 1-month SOFR plus a 2.65% margin. The Government of Ghana issued a sovereign guarantee in support of the loan. The loan was to be repaid with the proceeds from cocoa exports throughout the 2023/2024 crop season. It was also collateralized against receivables from future cocoa sales contracts. In December 2023, COCOBOD drew down $600 million from the $800 million facility Due to significantly lower-than-expected cocoa output—around 40 percent below target—COCOBOD announced the cancellation of the remaining $200 million of the loan. The loan was fully repaid in August 2024.
Staff comments
1. The individual contributions of the banks that participated in the lending syndicate are unknown. For the time being, AidData assumes equal contributions ($133,333,333) across all 6 known members of the syndicate. 2. Ghana’s cocoa production is regulated by the Ghana Cocoa Board (COCOBOD), an organization separate from the Ministry of Food and Agriculture that is wholly owned by the Government of Ghana. COCOBOD does not purchase any of the cocoa which is exported, but is responsible for assuring the quality of the product. To ensure the high quality of Ghana’s cocoa exports, the COCOBOD oversees horticulture practices and regulates the use of pesticides and fertilizer. In addition, COCOBOD sets the producer prices for cocoa farmers and, through a subsidiary, oversees the marketing of cocoa. The operations of the COCOBOD are funded through the receipt of a percentage of the revenue received from cocoa exports, but all profits after covering expenses are passed onto the Government of Ghana in the form of export taxes. 3. In August 2017, COCOBOD told the country’s parliament it was in financial distress due to obligations that included servicing China Eximbank loans for the Bui Dam Construction Project (captured via Record ID#183, ID#30801, ID#30709, and ID#30086). 4. Following a challenging 2023/24 season, COCOBOD announced it planned to borrow up to $1.5 billion for the 2024/2025 cocoa in a new intra-year trade facility. However, negotiations with international lenders were protracted as COCOBOD face challenges to secure favorable interest rates due to concerns over the organization’s financial stability and declining cocoa production impacted by, among other reasons, unfavorable weather conditions and disease outbreaks. These challenges and the delay in securing the intrayear trade facility (which is typically secured in September) led COCOBOD to seek for the second consecutive year bridge financing from cocoa traders at higher interest rates as it continued discussions with international lenders. In November 2023, COCOBOD borrowed $400 million from cocoa traders, and again $200 million in March 2024 after the premature cancellation of the final $200 million tranche of the $800 million receivables-backed trade finance facility.