Cocobod In Talks For $500 Mln China EXIM Bank Loan
Cocobod is in talks with Export-Import Bank of China (EXIM) to secure a $500 million loan to overhaul the sector and protect against global price volatility, two senior officials have disclosed.
Bumper crops have sent global cocoa prices plummeting this year and pushed top producers Cote d’Ivoire and Ghana to step up collaboration with the aim of using their dominant position more effectively to influence the market.
Among the projects to be financed by the Chinese loan are specialised warehouses to stock excess production, the Cocobod officials, who asked not to be named, told Reuters.
“The whole idea of going to China was to source for funding for capital projects of medium to long-term. We need to adopt a new marketing system that will insulate us from price instability as we’ve seen in the past year,” one official said.
Ghana would pay back the loan over five years, including an initial two-year grace period. Though details have yet to be agreed, Cocobod may use cocoa beans to repay part of the loan, one of the sources said.
Cocobod also plans to spend the financing on irrigation to boost yields, on expanding processing facilities and to build roads and railways to make transportation easier.
In addition to the loan negotiations which began last month, Cocobod is in talks with potential partners in China to market semi-processed cocoa products from Ghana.
Cote d’Ivoire and Ghana are also jointly seeking $1.2 billion in financing from the African Development Bank to back their strategy of creating a buffer stock of cocoa beans with the aim of exerting more influence over world prices.
The Cocobod officials said the regulator wants to focus its annual syndicated loan on cocoa purchases. The loan has in the past been used to finance its operating costs and infrastructure projects as well.
However, last season’s $1.8 billion loan ran out well before the end of the harvest due to overspending on road projects, forcing Cocobod to secure bridge financing from the central bank to bring in the rest of the crop.
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