Narrative
Full Description
Project narrative
On October 4, 2022, a consortium of at least 18 financial institutions — including the Industrial and Commercial Bank of China (ICBC) and Bank of China (BOC) — finalized a $1.13 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 2022/2023 crop season. Participants in the loan syndicated included Bank of China, Industrial and Commercial Bank of China (ICBC), Coöperatieve Rabobank, MUFG Bank Ltd, Natixis, Standard Chartered Bank, Ghana international Bank plc, DZ BANK AG Deutsche Zentral-Genossenschaftsbank Frankfurt am Main (DZ Bank), the Arab Bank for Economic Development in Africa (BADEA), EcoBank Ghana Limited, the OPEC Fund for International Development, United Bank for Africa PLC, Ahli United Bank B.S.C., Federated Hermes Inc, AfrAsia Bank Limited, Citibank N.A, Absa Bank Ghana Limited, and GCB Bank Plc. Standard Chartered Bank, Coöperatieve Rabobank, Industrial and Commercial Bank of China (ICBC), MUFG Bank Ltd, Natixis and Ghana International Bank plc were the Initial Mandated Lead Arrangers for the facility. Bank of China Limited, London branch joined the facility as Senior Mandated Lead Arranger, while DZ BANK AG Deutsche Zentral-Genossenschaftsbank, Frankfurt am Main and the Arab Bank for Economic Development in Africa (“BADEA”) joined as Mandated Lead Arrangers. Ecobank joined as Arranger. The OPEC Fund, United Bank for Africa PLC, Ahli United Bank B.S.C. and Federated Hermes Inc joined as Lead Managers. AfrAsia Bank Limited, Citibank N.A, Absa Bank Ghana Limited and GCB Bank Plc joined as Managers. ICBC's estimated contribution is captured via Record ID#95485 and Bank of China Limited's estimated contribution is captured via Record ID#95486. The borrowing terms included a 7-month repayment period, an interest rate of the Secured Overnight Finance Rate (SOFR) plus a 1.75% margin, and a 0.5% default (penalty) interest rate. 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.
Staff comments
1. AidData has estimated the loan's all-in interest rate (6.58%) -- at the time it was issued -- by adding 1.75% to daily SOFR as of October 4, 2022 (4.83%). 2. The individual contributions of the banks that participated in the lending syndicate are unknown. For the time being, AidData assumes equal contributions ($62,777,777) across all 18 members of the syndicate, which implies that the total financial commitment from Chinese state-owned banks was $125,555,554. 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. The syndicated loan agreement can be accessed in its entirety via https://www.dropbox.com/s/usqqxqv4mknnm6f/COCOBOD%202022%20Syndicated%20Loan%20Agreement.pdf?dl=0.