COCOBOD Executives Conceal $87 Million in Debt to European Banks

Details are beginning to emerge as to why the Ghana Cocoa Board (COCOBOD) is having difficulty obtaining this year’s cocoa syndication loan from European banks.

According to the Herald, there has been distrust between Ghanaian companies and European financial institutions, including after COCOBOD failed to pay the final installment of $87 million on a syndicated loan to an international bank last year.

International banks have lost confidence in the Joseph Boahen Aidoo-led COCOBOD and the Akufo-Addo administration and are not ready to disburse funds fearing that the government will divert the funds to other things, especially to win elections, rather than purchasing and supplying cocoa beans.

Further complicating COCOBOD’s problems is that President Nana Akufo-Addo has reportedly insisted to some banks that COCOBOD is a private company, despite the knowledge that he has fired his brother-in-law, Emmanuel Ray Ankrah, as Deputy CEO for Finance and Administration and is deciding who gets paid, how and when.

“The current COCOBOD under Boahen Aidoo is seen as very dishonest by European banks,” a COCOBOD source said, revealing that European banks also consider it very risky to provide further funding to the institution due to the management’s imprudent fundraising, sometimes at high prices.

Interestingly, the Minister of Finance, Dr Mohammed Amin Adamu, said the country’s cocoa regulatory body, COCOBOD, was still in negotiations with foreign lenders to raise a syndicated loan to fund the next harvest season.

According to him, COCOBOD has not completely abandoned the entire cocoa syndication loan program.

“COCOBOD is not abandoning cocoa syndication. Negotiations are ongoing but it is unlikely to raise more than $600 million of the initial target of $1.5 billion,” Dr. Amin Adamu was quoted as telling Bloomberg during an interaction with reporters in Accra on Monday, August 26, 2024.

He said the failure to meet this fundraising target has led COCOBOD to explore alternative sources of funding.

The update from the Finance Minister came after COCOBOD announced last week that it would break with the 32-year tradition of raising funds from international banks every cocoa harvest season and adopt a self-reliant approach at the start of the 2024/2025 cocoa harvest season in September 2024.

COCOBOD CEO, Boahen Aidoo, explained that the decision to stop raising syndicated loans from external sources was part of a wider strategy towards self-reliance and reduced dependency.

According to data released by COCOBOD, Ghana’s cocoa production reached 429,323 tonnes at the end of harvest in June this year.

This is less than 55 percent of the seasonal average production, and the decline has been blamed on poor weather, swollen pod disease and devastated harvests due to illegal mining activities in cocoa-growing areas.

These developments have not only disrupted COCOBOD’s operations but have also impacted the supply value chain, driving up the price of cocoa beans in the international market.

Amid COCOBOD’s woes, a group calling itself the Concerned Farmers Association of Ghana (CFAG) has raised the alarm over the agency’s deteriorating financial health which has put the country’s cocoa industry in a precarious position.

In this regard, CFAG calls for a state of emergency to be declared and further urges governments, stakeholders and the international community to act swiftly to prevent the collapse of this vital industry.

The Chairman of the CFAG, Farmers General, Nana Oboadi Boateng Bonsu, made the call in a statement on Thursday, August 22, 2024.

“COCOBOD, the entity responsible for purchasing cocoa from farmers, is reportedly facing severe financial difficulties and is unable to meet its obligations. This situation poses a serious threat to the livelihoods of over 800,000 cocoa farmers, many of whom depend on cocoa cultivation as their main source of income,” the statement said.

According to the statement, if COCOBOD is unable to purchase cocoa due to lack of funds, it could have devastating consequences for the entire industry which contributes significantly to Ghana’s economy.

The International Cocoa Organisation (ICCO) explains that Ghana’s cocoa industry contributes about 20% of the country’s GDP. A 2020 study by COCOBOD estimated that the average income of Ghanaian cocoa farmers is 2,500 GHS (about US$400) per year.

The current financial crisis therefore threatens not only farmers’ livelihoods but also the country’s broader economic stability,” the statement said.

To address this emergency, CFAG is advocating for the establishment of a Cocoa Bank, funded by a nationwide fundraising campaign with the goal of raising $5 billion.

The cocoa bank provides the financing needed to purchase cocoa from farmers, ensuring they receive a fair price for their produce, stabilizing the industry in the process.

CFAG calls on governments, all political parties, stakeholders and the international community to support this effort.

The association called on all political parties to suspend election activities in order to focus on responding to the crisis.

CFAG believes that a united effort is essential to safeguard the future of Ghana’s cocoa industry and the livelihoods of those who depend on it.

COCOBOD management had claimed that it invested close to 1 billion cedis last year in rehabilitating dilapidated cocoa plantations and those hit by cocoa blast disease in a bid to boost domestic production in the short to medium term.

Minister Boahen Aidoo noted that the initiative was part of efforts to sustain cocoa production and farmers’ livelihoods, and as such, he is confident that the country will produce more than 800,000 tonnes of cocoa in the 2024/25 season that begins in September.

The CEO and Vice President for Finance and Administration, Ray Ankrah, was reacting to media reports that COCOBOD’s administrative costs rose to 3.4 billion cedis last year when cocoa production fell.

Aidoo said the funds would be used to clear diseased and dilapidated farms, grow and plant seedlings, and maintain the rehabilitated farms before handing them over to farmers across the country.

He said this strategic investment in farmers and farms would increase the commission’s administrative costs to GH¢3.4 billion in 2023.

Aidoo therefore said it was misleading for people to suggest that COCOBOD spent 3.4 billion cedis on its head office last year when most of the funds were used to support cocoa production and the welfare of crop farmers.

The deputy chief executive officer for finance and administration said misleading reporting had been made despite detailed explanations in the board’s audited accounts.

“I believe this is a deliberate attempt to cause public discontent because the Auditor General’s report as recorded in the audited accounts and financial statements for the fiscal year 2023 clearly shows that the administrative expenses include an expense of 943 million cedis incurred under the Productivity Enhancement Programme (PEP).”

“The 943 million cedis was actually used to rebuild diseased and weakened farms, sustain the livelihoods of affected farmers and increase cocoa production from the 2024/25 season,” Ankrah said.

He explained that apart from this one-time expenditure, which was covered by a loan taken out from the African Development Bank (AfDB), administrative costs had actually been reduced in 2023.