COCOBOD ends six-year losing streak — Posts GH¢2.3 bn profit in 2023

The Ghana Cocoa Board (COCOBOD) has ended its six-year losing streak following the restructuring of cocoa bills worth GH¢7.9 billion.

The cocoa regulator posted a profit of GH¢2.3 billion in the 2022/2023 crop season after posting losses of GH¢199 million, GH¢395 million, GH¢78 million, GH¢275 million and GH¢426 million in the preceding years.

A year ago, COCOBOD launched a debt securities exchange programme to restructure cocoa bills. Under the programme, it invited holders of its short-term debt securities (the Cocoa Bills) to voluntarily offer to exchange their Cocoa Bills for longer-term debt securities with averagely lower coupon rates.

Holders of the Cocoa Bills whose offers were accepted received five new bonds which would mature in 2024, 2025, 2026, 2027 and 2028. The new bonds came at a coupon rate of 12.5%.

The successful completion of this aspect of the domestic debt exchange programme was very crucial to the country’s quest to restore debt sustainability, which is a critical component of the IMF programme.

As per the IMF’s methodology and as explained in their Staff Report published on May 17, 2023, cocoa bills are included in the public debt perimeter, considering the risk and contingent liability on the government debt profile.

The IMF/WB debt sustainability analysis has demonstrated unequivocally that Ghana is faced with a significant financing gap over the coming years and that the country’s public debt (including COCOBOD’s cocoa bills) is unsustainable.

Big relief 
Addressing the media after a field trip to some cocoa farms in the Central and Western regions, the Chief Executive Officer of the Ghana Cocoa Board, Joseph Boahen Aidoo, said “before the restructuring, we were paying interest of around 30 per cent. However, with the restructuring, the coupon rates have reduced to 12.5%”.

“Imagine paying interest of over 30% on a GH¢7.9 billion debt. It was just hard-crushing. The 12.5% is manageable and has brought some big relief to COCOBOD,” he said.

He said this was one of the major drivers of the 2022/2023 profit.

Cocoa roads 
With the turn-around of the financial performance, Mr Aidoo said COCOBOD would seek long-term funding to continue with the Cocoa Roads initiative.

He said the cocoa roads initiative came to a standstill due to the impact of COVID-19, which hit hard at the revenues of the COCOBOD.

“COVID-19 impacted our revenue flows. Prices plummeted and the revenue streams ran down so we had to suspend all these cocoa roads,” he said.

Also, he said per IMF policy, COCOBOD could not access medium to long-term funding which was required to finance cocoa projects that are long-term in nature.

“Since 2016, COCOBOD has been recording losses and per the IMF policy, when your books are in red, you cannot go for a long-term facility. However, we have always argued that we will need a long-term facility to prosecute long programmes.

“We cannot finance cocoa roads with our annual syndicated loan which is repaid within one year,” he said.

He said now that the books look good, COCOBOD would make the request again and hopefully, the IMF would give a no objection.

“Once we get it, we will resume all the cocoa roads,” he added.

$100 million fund 
The Chief Executive also disclosed that COCOBOD had secured a $100 million facility from the World Bank to rehabilitate overaged and unproductive cocoa farms to help improve cocoa production and farmers’ livelihoods.

He said all documents regarding the agreement had been signed and the rehabilitation programme would benefit the country’s six cocoa districts.

“This intervention is definitely going to increase Ghana’s cocoa production and it is expected that by this intervention, we are going to have young cocoa trees by the next two years,” he stated.

He said it was unfortunate that some farmers were maintaining cocoa trees that did not have pods or blossoms, and that though they used weedicides, they received nothing in return, leaving them in poverty.

According to him, the government, with support from the World Bank, has intervened to restore these moribund cocoa farms.

He highlighted Assin Fosu, Nkawkaw, New Edubiase and Juaso as districts that will benefit from the cocoa rehabilitation programme.

The COCOBOD CEO stated that while the rehabilitation would be done in phases as part of the agreement, all relevant requirements have been met to allow the government to access the funds so that work can begin in earnest.