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AfDB and partners sign $600m loan agreement to boost cocoa production in Ghana

Anna Lyudvig
Nov. 12, 2019, 1:33 p.m.
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The African Development Bank, Credit Suisse AG, the Industrial and Commercial Bank of China and Ghana Cocoa Board (COCOBOD) have signed a $600m syndicated receivables-backed term loan to boost cocoa productivity in Ghana.

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The African Development Bank, Credit Suisse AG, the Industrial and Commercial Bank of China and Ghana Cocoa Board (COCOBOD) have signed a $600m syndicated receivables-backed term loan to boost cocoa productivity in Ghana.

COCOBOD is a fully state-owned company solely responsible for Ghana’s cocoa industry, controlling the purchase, marketing and export of all cocoa beans produced in the country.

COCOBOD will use the facility to raise cocoa yields per hectare and increase Ghana’s overall production.

These include financial interventions to sustainably increase cocoa plant fertility, improving irrigation systems, rehabilitating aged and disease-infected farms.

The funds will also help increase warehouse capacity and provide support to local cocoa-processing companies.

Ghanaian President Nana Addo Dankwa Akufo-Addo said the agreement would help to ensure higher incomes for Ghana’s cocoa farmers.

“It was critical that we find a mechanism for scaling up the value chain for our farmers and that is where the Bank came in,” Akufo Addo said. “We see this agreement as a turning point and…to what is possible on this continent.”

The Bank, as Original DFI Lender and Initial Mandated Lead Arranger, is partnering with Credit Suisse as Original Commercial Lender, Global Commercial Coordinator, Co-Mandated Lead Arranger.

Credit Suisse is also acting as Joint Commercial Underwriter and Bookrunner to structure and fund a dual-tranche facility comprising a $250m, 7-year DFI tranche with the Bank, as well as a $350m 5-year commercial tranche.

The Industrial and Commercial Bank of China, London Branch joined as an Original Commercial Lender, Co-Mandated Lead Arranger and Joint Commercial Underwriter and Bookrunner ahead of syndication.

Syndication of the facility is underway.

Ghana is the world’s second-largest cocoa producer, which employs some 800,000 rural families and produces crops worth about $2bn in foreign exchange annually.

The COCOBOD transaction was launched at the Africa Investment Forum in 2018, and a year later, the signing is a demonstration of the Forum’s ability to raise much needed financing, including from international commercial financiers, for projects in Africa.

Prior to the agreement, COCOBOD did not have access to long-term debt capital.

The President of the African Development Bank Dr. Akinwumi A. Adesina said that Africa could become a global hub for cocoa and cocoa-based products.

“All cocoa producing countries will get similar support (from the Bank). Ghana is bankable, cocoa is bankable and of course Africa is bankable,” Adesina said.

Signing for Credit Suisse, Madthav Patki said the “landmark” transaction would facilitate future long-term investment in the Ghanaian cocoa sector.

“This is a positive contribution to a key sector of Ghana’s economy. “It is a moment of tremendous pride…This is what the Africa Investment Forum is all about,” Patki said.

He also commended the Bank’s signature expertise in financial instruments, that enabled them to leverage financing for the deal.

The Africa Investment Forum, an initiative of the African Development Bank is an innovative, multi-stakeholder transactional marketplace, dedicated to raising capital, advancing projects to bankable stage, and accelerating financial closure of deals. 
 

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