Ghana Cocoa Board (Cocobod) and the African Development Bank on Tuesday signed a $600 million receivables-backed term loan facility for the development of the cocoa sector.
The 7-year long-term investment, which was approved last Wednesday by Parliament, would help to boost cocoa production through the rehabilitation of ageing plantations, finance new warehouses to store cocoa beans longer and boost the processing of cocoa beans.
Under the deal, African Development Bank provided $250 million from development finance institutions while Credit Suisse lined up the remaining $350 million from commercial lenders.
AfDB President Dr Akinwumi Adesina, Eraj Shirvani, Vice Chairman Emerging Markets of Credit Suisse, Julian Madgett of Industrial and Commercial Bank of China and Mr Joseph Boahen Aidoo, signed the deal on behalf of their respective organisations in the presence of President Nana Addo Dankwa Akufo-Addo on the sidelines of the Africa Investment Forum.
Commenting on the financial closure, President Akufo-Addo underscored the critical role cocoa had played as a major foreign exchange earner in the development of Ghana.
He said despite Ghana being known for its quality cocoa, farmers had not seen much benefit from the export of the raw cocoa beans, adding that there was the need to change the dynamics and the imbalance while the chocolate makers took a chunk of the $120 billion industry.
Ghana and Ivory Coast, which produce between them 65 per cent of the world's cocoa, had stepped up cooperation in the sector in recent years, aiming to exert greater influence over global cocoa prices.
The two countries had set up a minimum price of $2,600 per tonne floor price and living income differential of $400 per tonne in a bid to boost and address the imbalance between farmers' incomes and money made by the big commodities traders.
President Akufo-Addo said the cooperation between the two countries had worked very well, adding that "it is so far so good."
He said the mechanism would help spread out the value chain contribution as it would enable processing facility to add value instead of the beans being exported in the raw form.
President Akufo-Addo commended the African Development Bank for its catalytic role in the development of the continent, saying it is a symbol of what is possible in Africa.
On the reaction of buyers to the new initiative by Ghana and Cote d'Ivoire, the President said the buyers had positively bought into the idea and lauded the leadership role of Mars, an American global manufacturer of confectionery, in moving the goal forward.
He said Ghana would wholeheartedly welcome the formation of a regional bloc of cocoa producers, including Nigeria and Cameroun, to advance the cause of farmers.
On his part, Dr Adesina said the AfDB would be making a similar financial backing for Ivory Coast, just as it did for Ghana, to undertake reforms in the cocoa sector, saying with the increase in the bank's capital by 125 per cent to $208 billion, all this is possible.
He said investment would help to ensure that countries did not focus on primary production but added value to derive more benefits from the value chain, adding that Africa would want to be rich.
He commended the leadership of President Akufo-Addo and his counterpart Alassane Ouattara of Ivory Coast for working to change the narrative of farmers as far as cocoa production was concerned.
"I am happy the two presidents are working to change the narrative to make Africa the hub of cocoa value chain," he said.
Organized by the African Development Bank and its partners, the second edition of the Africa Investment Forum, will take place from 11 to 13 November 2019 in Johannesburg, South Africa.
The multi-stakeholder transactional marketplace is aimed at raising capital, advancing projects to bankable stage and accelerating financial closure of deals.
Over 2000 delegates from 109 countries are attending the innovative investment marketplace which will bring together heads of state, project sponsors, pension funds, sovereign wealth funds, institutional investors in 60 boardroom sessions to move projects from commitment to action.
Last year, the Forum achieved over $36 billion of investments interests that were signed or being were closed.
The Africa Investment Forum partners include Africa 50, Africa Finance Corporation, Africa Export-Import Bank, Development Bank of Southern Africa, European Investment Bank, Islamic Development Bank, Trade and Development Bank.