Ghana’s Cocoa regulator, COCOBOD, has agreed on a $1.13 billion syndicated loan to fund their Cocoa purchases for the 2022-2023 Cocoa season, which began October 7th.
Every year Ghana’s Cocoa purchases, mainly beans, are financed by loans from international banks. The leading banks involved with the loan include Cooperative Rabobank, the Industrial and Commercial Bank of China (ICBC), DZ Bank, MUFG Bank, Natixis, Standard Chartered, the Arab Bank for Economic Development in Africa (BADEA) and the Ghana International Bank.
This year’s figure is significantly less than the $1.5 billion loan secured only last year. Ghana’s parliament had originally approved a larger loan of $1.3 billion at the end of July.
Recently, Cocoa production in Ghana has seen a steep decline, sitting at 689,000 tonnes as of September 1st instead of the 800,000 tonnes previously forecasted.
As Ghana is a world leader in Cocoa production, second only to Côte d’Ivoire, its output has a significant impact on global supplies. As a result, the International Cocoa Organisation (ICCO) has had to upwardly revise its global Cocoa deficit forecast.
The new price for Ghanaian Cocoa was announced last week after being delayed for several days following a stakeholder meeting. According to Reuters, the delays surprised some industry insiders. The director of a European Cocoa company said Ghana would struggle to get the same prices as neighbouring Côte d’Ivoire. The problem is that the Ghanaian currency is falling and is quite volatile at the moment. Inflation lowers the price locally, so the price in Ghana will end up being lower than in Côte d’Ivoire.
We didn’t understand the comment about the falling cedi, since a devalued currency makes exports more attractive, however, Ghana’s inflation is rampant compared to Côte d’Ivoire, so this will make the value of payments lower.
Ghana’s annual inflation rate increased every month for the last year to 31.7% in July of 2022, from 29.8% in June, breaching the upper ceiling of the central bank’s target band of 6% to 10% for eleven months. Inflation in Côte d’Ivoire by comparison, is relatively mild at around 6.2%.
Ghana’s local currency, cedi, has lost approximately 30% of its value against the dollar this year alone.
