End of syndicated loan: Our intention is to create consistent flow of dollars, says COCOBOD CEO

The Ghana Cocoa Board (COCOBOD) has announced it will not seek a syndicated loan for the upcoming 2024/2025 cocoa season, marking a significant shift in its financial strategy.

This decision, the first of its kind in over 30 years, was revealed on Tuesday (20 August), ahead of the new season, which starts on Sunday (1 September).

Speaking on the Asaase Breakfast Show (ABS) on Wednesday (21 August), Joseph Boahen Aidoo, CEO of COCOBOD, explained the rationale behind the move.

He highlighted the need for a more consistent flow of dollars into Ghana’s economy, contrasting the “bulk and bust” pattern associated with the traditional syndicated loans.

“When we go for syndication, if you look at the inflows, the inflows come in bulk and bust. Bulk and bust in the sense that if we are syndicating US$1.5 billion as we were planning to do, a bulk of it goes through the first drawdown, let’s say about US$900 million,” Aidoo said.

“There is that rush for dollars because everybody knows that COCOBOD’s dollars they [are] hard currency, and then immediately it busts, and then it’s gone and then the cedi is still down.”

Aidoo noted that the irregular inflow of syndicated funds can contribute to volatility in the local currency, the cedi. To mitigate this, COCOBOD aims to establish a more stable dollar inflow directly linked to cocoa shipments.

“What we intend doing is going to bring about [a] consistent flow of dollars,” he said.

“Whatever cocoa we are shipping, the money will be flowing directly to Ghana; the dollars will be flowing directly to Ghana and from the Ghana International Bank (GIB), and then it comes to the Bank of Ghana (BoG) and it is going to be consistent. When there is that consistent flow, it cannot create any bust.”

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