The government has developed a domestic funding model to support indigenous Licensed Buying Companies following the collapse of COCOBOD’s syndicated loan system, according to Deputy Minister for Finance, Hon. Thomas Nyarko Ampem.
Responding to parliamentary questions from Hon. Abdul Kabiru Tiah Mahama, MP for Walewale, the Asuogyaman MP explained that the syndicated loan system “failed under the watch of the previous managers of COCOBOD after thirty-two years of successful implementation.
Hon. Ampem informed the House that COCOBOD has operated a “buyer-led pre-financing model” for the 2024/2025 and 2025/2026 cocoa seasons. He noted that this model is “entirely dependent on the buyers’ willingness to bear the financing cost and pre-finance the purchase of the cocoa.”
“The key motivation for buyers in the previous season was the rollover contracts which were priced at about two thousand six hundred and sixty-one dollars when the existing market prices were above eight thousand dollars per ton,” he said. However, buyer interest has declined now that “the gap between the rollover contracts and the market prices have closed and most of the rollover contracts have been serviced.”
To resolve this issue, Hon. Ampem said the government has adopted a new strategy to “mobilize domestic resources to purchase cocoa and repay with cocoa proceeds within each year.” This model aims to establish a revolving fund for COCOBOD that will “turn around at least once during the season.”
“This model will revive the indigenous licensed buying companies that have been completely thrown out of business as a result of the current financing model,” the Deputy Minister stated.
He added that the new approach allows COCOBOD to sell any volume of beans to local processing companies, and to “process and sell value-added products instead of the raw beans.”
Hon. Abdul Kabiru Tiah Mahama had requested that the Minister for Finance outline alternative financing measures for indigenous LBCs lacking syndicated loans and seed funding for the 2025 and 2026 seasons.
By: Rainbowradioonline.com/Ghana