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September 30, 2010

Ghana cocoa stakeholders agree on $1.5 billion financing for 2010/11 crop

 by Charles Nixon Yeboah

A $1.5 billion cocoa trade financing agreement for the 2010/2011 financial year was recently concluded by a consortium of banks, Ghana Cocoa Board (COCOBOD) and that country's government. The deal is 25 percent bigger than the previous $1.2 billion initialled for the 2009/2010 financial year.

Over 36 banks from the USA, UK, China, Germany, South Africa and Ghana including Crédit Agricole, ICBC, Ghana International Bank, SMBC and Standard Bank Group participated in the trade financing.

While the structure of the deal remained unchanged, the margin remains 90 basis points or 0.9 percent.
Also, it is 250 basis points or 2.5 percent more than last year's facility and twice the 45 basis points paid on the 2008 facility.

Kwabena Duffuor, Minister of Finance and Economic Planning, speaking at the ceremony, said the cocoa sector would continue to remain an important anchor of Ghana's economy, adding that government would continue to support the expansion of cocoa sector by providing the necessary financial incentives to cocoa farmers to make the industry attractive to young and energetic Ghanaians as well as foreign investors.

He said the cocoa industry, which supported the Ghanaian economy in terms of revenue, foreign exchange earnings and employment generation, would continue to do so despite the expected beginning of production of fossil oil in December.

“We want to become the number one producer of cocoa in the world by 2012. We are therefore committed to working with COCOBOD to increase cocoa production to one million tonnes by 2012.”

Noting that the macroeconomic environment was good, he assured the financiers that they had secured a better deal.

Anthony Fofie, Chief Executive Officer, COCOBOD, assured the lead arrangers, arrangers and all participating banks that their trust and confidence had not been misplaced.

“Today, the international financial markets have spoken, the markets are more confident in the COCOBOD and the economy of Ghana than we had envisaged. It is also refreshing to see a number of new banks joining the facility at record levels,” Fofie said.

Commenting on the landmark deal, Alhassan Andani, Managing Director of Stanbic Bank Ghana said “Cocoa was a strategic economic commodity for Ghana both as a significant contributor to GDP and as a consistent source of foreign exchange earnings. It was therefore necessary for us, as a bank, to promote and enhance the industry and we are happy to do this.”

He noted that COCOBOD was a world-class institution, adding that it could repay the facility to the banks.

Anne-Marie Woolley, Head of Structured Trade & Commodity finance, Africa at Stanbic Bank Africa said: “The Ghana Cocoa Board transaction remains one of the largest structured soft commodity finance facilities in the African market, and it is pleasing to see such strong and continued demand for this premier tranperformance track-record. “The road leading to this successful facility started some three months ago in saction from international investors, which is a reflection of its long standing structure and excellent London through Beijing to Accra.

Accra Mail

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