COCOBOD to Launch Local Commercial Paper for GHS 100 Billion Funding

Ghana Cocoa Board (COCOBOD) will release a new local funding programme. It aims to raise working capital from domestic investors through a commercial paper arrangement. This move will significantly reduce the institution's reliance on foreign loans.

Ato Boateng, Deputy Chief Executive Officer for Finance and Administration at COCOBOD, stated that transaction advisors are actively working on the structure. This program will source funding within Ghana to support cocoa purchases during the crop season. Pension funds are a key target, expected to provide a major source of financing.

This initiative aligns with Ghana's broader economic strategy to internally finance critical sectors. It reduces exposure to international market fluctuations and strengthens domestic financial markets. Such a shift could improve the stability of Ghana's cocoa sector, a backbone of the national economy. Previous financing models often involved large syndicated loans from foreign banks.

Mr. Boateng confirmed progress on the program. He stated, "We've gone very far and hired all the advisors that we need to launch the issuance." He added that the structure of the finance is almost finalised. This addresses all regulatory concerns raised by various parties.

The shift towards local financing has several important implications. It potentially provides a more stable funding source for COCOBOD's operations. This could protect the cocoa sector from global financial shocks. It also creates new investment opportunities for domestic institutions, particularly pension funds. The increased demand for local financial instruments could further develop Ghana's capital market. Policy makers will monitor the program's impact on domestic liquidity and interest rates.

Pension funds currently manage assets estimated at GHS 100 billion. They can invest up to 35% of their assets in such programmes. This offers a substantial pool of potential funds for COCOBOD. Commercial banks are also expected to participate. COCOBOD plans to involve Development Finance Institutions (DFIs) to strengthen the banks' lending capacity. This innovative approach aims to maximise local financial participation.

COCOBOD is also considering private placements. These placements will target major stakeholders within the cocoa value chain. International buyers and industry players will be invited to participate. This will give them a direct stake in the financing of cocoa purchases. The entire program is being developed in close collaboration with advisors and regulatory authorities.

The planned commercial paper will have a 270-day maturity period. This is equivalent to nine months. It will function as a working capital facility. The cocoa season, from September to January, sees about 70% of Ghana's cocoa produce purchased. The program will operate on a tranche-based system. This ensures efficient use of funds and minimises unnecessary borrowing costs. Funds will be drawn only when needed for purchases and repaid quickly. This strategy enhances financial prudence.