Professor Lord Mensah has drawn a connection between the challenges faced by Ghana’s cocoa industry regulator, Cocobod, in securing its regular syndicated loans and the country’s diminishing creditworthiness.
Recent findings from a Reuters report highlight that Cocobod has resorted to pre-financing agreements with trading companies such as Olam Group Ltd. and Barry Callebaut AG, marking the first time in three decades.
These agreements are aimed at securing funding for critical needs like seedlings, chemicals, fertilizers, and bean purchases from farmers for the 2023-24 season.
The shift towards such arrangements is driven by the difficulties Cocobod encounters in obtaining traditional bank loans, compelling them to explore alternative funding sources, including loans from cocoa traders. Professor Lord Mensah, an economist from the University Of Ghana Business School’s Department of Finance, explains to WADR that most banks are now demanding higher interest rates as a prerequisite for releasing their funds.