ICBC contributes to $1.5 billion syndicated receivables-backed trade finance facility to COCOBOD for its 2021/2022 crop season financing needs (Linked to Project ID#92597)

On September 21, 2021, a consortium of 28 financial institutions — including the Industrial and Commercial Bank of China (ICBC) and Bank of China (BOC) — finalized a $1.5 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 2021/2022 crop season. The amount is expected to be used to purchase some 950,000 tonnes of cocoa for the period. The 28 participants in the loan syndicate included Bank of China (Project ID#92597), Standard Charted Bank, Industrial and Commercial Bank of China (Project ID#92598), Coöperatieve Rabobank, MUFG Bank Ltd, Natixis, Nedbank Ltd, Ghana international Bank, EcoBank Ghana Limited, Standard Chartered Bank, Société General Ghana Limited and Absa Ghana Limited. The borrowing terms included a 7-month repayment period, an interest rate of LIBOR plus 110 basis points, a commitment fee of 0.62%, and an upfront fee of 1.25%. The loan was expected to be repaid in seven equal installments between February to August 2022. The Government of Ghana issued a sovereign guarantee in support of the loan. The loan was also secured by (i.e. collateralized against) receivables from future cocoa sales contracts.

Additional details

1. AidData has estimated the all-in interest rate by adding 1.1% to the average 6-month LIBOR rate in September 2021 (0.197%). 2. The individual contributions of the banks that participated in the lending syndicate are unknown. For the time being, AidData assumes equal contributions ($53,571,428) across all 28 members of the syndicate, which implies that the total financial commitment from Chinese state-owned banks was $107,142,856. 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 Project ID#183, ID#30801, ID#30709, and ID#30086). 5. AidData has assumed that the 1.25% flat (upfront) fee is functionally equivalent to a management fee.

Number of official sources

3

Number of total sources

9