The Ghana Cocoa Board (COCOBOD) is close to launching a new financing program. This initiative will allow COCOBOD to raise money directly from investors within Ghana. Pension funds, commercial banks, and other industry players are the main targets for this funding. The goal is to secure money needed to buy cocoa beans when the harvest season is at its peak.
This new funding approach aims to make COCOBOD less reliant on borrowing from foreign banks. Deputy Chief Executive Officer for Finance and Administration, Ato Boateng, confirmed this at the Ghana-UK Investment Summit. He stated that transaction advisors are finalizing the structure of the program. COCOBOD wants to borrow money locally to support its operations. They have made good progress in designing this framework. They are also addressing concerns raised by regulators and other stakeholders. Mr. Boateng mentioned that advisors are working hard to finalize the financing structure. This work aims to satisfy all regulatory requirements.
Ghana's economy relies heavily on cocoa exports. COCOBOD plays a vital role in this sector. It buys cocoa from farmers and manages its export. Historically, COCOBOD has often relied on large international loans. These loans are often called syndicated loans. This new plan is part of a wider government effort to reform COCOBOD. The government wants to see more financial stability for the cocoa regulator. The recent focus on domestic capital aligns with broader economic goals. These goals include strengthening local financial markets. Data shows pension funds manage large sums of money. These funds could provide significant capital for COCOBOD.
Mr. Boateng explained that pension funds are a top priority. Ghana's pension funds manage about GH¢100 billion in assets. Current rules allow them to invest a portion of this money. COCOBOD believes it can attract up to 35% of this potential allocation. This could amount to billions of Ghana cedi. Commercial banks are the second main source of funding. COCOBOD is exploring creative ways to encourage their participation. Development Finance Institutions may also join to boost banks' lending power. This makes the program more attractive to lenders. Key industry players will also be approached. This includes major cocoa buyers. They might invest through private placements. This gives them a direct stake in COCOBOD's success.
The proposed financial instrument is a commercial paper. This is a short-term loan agreement. COCOBOD plans to issue a 270-day commercial paper. This maturity is about nine months. It matches the cocoa purchasing season. The season typically runs from September to January. During this period, about 70% of cocoa is bought. This commercial paper will act as a working capital facility. COCOBOD can draw funds when needed for purchases. It will repay investors as it earns money from selling cocoa. The program will use tranches. This means funds will be drawn only when necessary. This prevents unnecessary borrowing costs. It also ensures money is used for its intended purpose. Finance Minister Dr. Cassiel Ato Forson has supported these reforms. He announced new legislation to reform COCOBOD. Governor of the Bank of Ghana, Dr. Johnson Asiama, also advocates for this model. He believes COCOBOD should access long-term domestic capital.