The African Development Bank (AfDB) said on Friday it and other institutions had arranged a $1.2 billion short-term loan for Ghana's Cocoa Board (Cocobod) to pay for the purchase of its upcoming cocoa crop.
In a statement, the AfDB said it would provide $100 million in two tranches as part of a trade loan package set up to mitigate the impact of the world financial crisis in Africa. It did not say who the other lenders were.
"Back in April, when the financial crisis looked like it would severely hamper Cocobod's ability to mobilize adequate funding, the bank came in early to signal its support to the markets," AfDB president Donald Kaberuka said.
"It is our first large-scale syndicated trade finance operation in the agriculture sector," he added.
Ghana is the world's second largest producer of cocoa after Ivory Coast but Cocobod, the industry's main regulator in the West African country, had a financing gap of at least $100 million because of caution among commercial lenders, the AfDB said.
The loans will be used to finance the purchase of Ghana's main 2009-2010 cocoa export crop, which is normally paid for with short-term loans. As in past years, Cocobod had been seeking a $1.2 billion syndicated loan to cover the costs.
The farming sector, led by cocoa, is the mainstay of Ghana's economy, contributing 35 percent of gross domestic product.
Cocobod is preparing to open the 2009/10 cocoa season next month, targeting purchases of at least 670,000 tonnes. In the longer term, it plans to raise production to 1 million tonnes in 2012, mainly by using more fertilisers and high-yielding seeds.