The Ghana Cocoa Board has attributed the over 23 percent increase in the all inclusive rate for this year’s cocoa syndicated loan, to a rise in the Libor rate during the period.
Ghana on Wednesday [September 21, 2016], signed the 1.8 billion dollars loan facility for cocoa purchases for the 2016/2017 crop year.
The all inclusive rate for the loan facility was 1.47 percent; up from the 1.19 percent the previous year.
Some industry watchers have raised concern at the increase particularly at a time that cocoa sector is faced with an array of constraints which has affected output.
But explaining the rationale for the increase, the Deputy Director of Finance at the Ghana COCOBOD, Asamoah Frimpong said the increase was largely because of the rise in the libor rate at the time of negotiating this year’s credit facility.
“The main factor causing the change in the all inclusive rate was the change in the Libor rate. Last year at the time we were negotiating the loan, the libor rate was 0.1866 percent. That had however shot up to 0.446 percent so the difference was actually caused by the change in the libor. Also, so many factors can contribute to the increase,” he stated.
The exit of Britain from the European Union (EU) in June this year also affected decision on the libor rate.
The LIBOR is a benchmark rate that some of the world’s leading banks charge each other for short-term loans.
Though Ghana signed 1.8 billion dollars, the country is entitled to an additional 200 million dollars from its creditors when the crop performs better and requires further funds.
Indigenous bank, Fidelity, is among the 24 syndicated banks providing the credit facility for COCOBOD.
Meanwhile the CEO of COCOBOD, Dr. Stephen Kwabena Opuni says his outfit with the support of government is making frantic efforts to support the country’s cocoa sector.
According to him, the provision of free hybrid seedlings to cocoa farmers is expected to increase from the 50 million seedlings equivalent to about 42,000 hectares of cocoa farm to 60 million seedlings equivalent to 50,000 hectares of cocoa farms.
This intervention is also expected to culminate in about 500,000 hectares of new cocoa farms over the next ten years.
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By: Pius Amihere Eduku/citibusinessnews.com/Ghana