Narrative
Full Description
Project narrative
On September 21, 2016, a consortium of 25 financial institutions — including Bank of China (BOC) — finalized a $1.8 billion 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 2016/2017 crop season. The 25 participants in the loan syndicate included Deutsche Bank AG, Nedbank Ltd., Standard Chartered Bank, Bank of Tokyo-Mitsubishi UFJ, Natixis, Rabobank, Société Générale, DZ Bank, ABN Amro bank N.V., Attijariwafa Bank Europe, Bank of China (London), Barclays Bank Ghana Ltd., Crédit Agricole Corporate and Investment Bank, Deutsche Bank AG, DZ Bank AG Deutsche ZentralGenossenchaftbank, Ecobank Ghana, Sumitomo-Mitsui Banking Corporation, KfW Impex-Bank GmbH, Intesa SanPaolo SpA, Mizuho Bank, Rand Merchant Bank, Ghana International Bank Plc, S.G Ghana Ltd., State Bank of India (London), and Fidelity bnk Ghana Ltd. The borrowing terms included a 1-year repayment period and an interest rate of LIBOR plus 67.5 basis points. The Government of Ghana issued a sovereign guarantee in support of the loan. The facility (loan) was also secured by the assignment of one or more sales contracts between COCOBOD and cocoa buyers. The cash proceeds from cocoa sales -- under the assigned sales contracts -- were to be paid into an offshore escrow collection account, which at all times was to equal to a fixed percentage (110%) of the amount outstanding under the facility (as a source of cash collateral). The borrower granted the lenders a charge over the offshore escrow collection account into which the proceeds payable under the assigned cocoa contracts were to be collected. The first tranche of the loan was disbursed on October 4, 2016. COCOBOD successfully repaid the loan in full — with interest.
Staff comments
1. AidData has estimated the all-in interest rate by adding 0.675% to the average LIBOR rate in September 2016 (1.247%). 2. The individual contributions of the banks that participated in the lending syndicate are unknown. For the time being, AidData assumes equal contributions ($72 million) across all 25 members of the syndicate. 3. 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. 4. 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). 5. Some sources suggest that there were 23 rather than 25 members of the lending syndicate. This issue warrants further investigation. 6. The loan agreement can be accessed in its entirety via https://www.dropbox.com/s/usqqxqv4mknnm6f/COCOBOD%202022%20Syndicated%20Loan%20Agreement.pdf?dl=0