Accra, Nov.6 GNA - Parliament has approved a US$600 million loan agreement between Ghana Cocoa Board and the African Development Bank for the cocoa productivity enhancement programme.
This follows a resolution moved by Mrs Abena Osei-Asare, Deputy Minister of Finance and seconded by Dr Mark Assibey-Yeboah, Chairman of the Finance Committee.
The Speaker on Tuesday, November 5, 2019 had deferred voting on the agreement for lack of quorum after the Minority in Parliament had raised concerns about the loan facility intended to increase cocoa production.
Legislators on the Minority Side had expressed reservations that the loan being acquired would not be used for its intended purposes.
Mr Haruna Iddrisu, the Minority Leader before the motion was moved had raised issues with regard to the US$200 million earmarked for disbursement for the processing companies.
He said the Minority had raised some questions and demanded some answers from the Minister of Finance relating to the US$200 million.
“We will need some assurance that those details would be provided. Particularly matters relating to the disbursement of the US$200 million to the processing companies,” he said.
Mr Iddrisu also had called on the Government of Ghana to provide better and further particulars on a US$600 million loan agreement between COCOBOD and the African Development Bank for cocoa productivity enhancement programmes.
He urged the Finance Minister to come back to the House with an elaborate financial expenditure plan as to how Government intends to drawdown an amount of GH¢3.239 billion (US$600 million) within six months.
“If you drawdown within six months how are going to use that money within six months, it is practically impossible and opens itself to the dangers of misapplication of the money,” Mr Iddrisu added.
Mr Iddrisu also called on the African Development Bank to monitor closely the debt sustainability level of the country and to also stagger the drawdown of the loan.
He said the Minority is not against the approval of the loan to support cocoa farmers in the country, but demand better and further details from government on the facility.
He stated that cocoa remains a major foreign exchange earner for the country and that it would not be wrong for government to be candid and say that it is borrowing for fiscal purposes.
He said the cocoa sector can serve that dual role: export earnings in terms of foreign exchange and improving the fiscal regime.
Mr Iddrisu also noted that the Minority would not hesitate to support government to approve US$200 million out of the loan to support for domestic cocoa processing.
He however stated that the Minority would want to know which particular cocoa processing companies are to benefit from the US$200 million financial support whether they are private or Public Private Partnership (PPP).
He argued further that the US$200 million could be used to established an entirely four new cocoa processing factories at a cost of US$50 million each.
Dr Mark Assibey-Yeboah justified the loan saying the facility is to enable COCOBOD obtain funds from the African Development Bank to finance cocoa productivity enhancement programmes with the aim of increasing Ghana’s national output to annual average of one million tons whilst also doubling average productivity from current 450kg per hectare to 1200 per hectare.
He said an amount of US$200 million out of the loan facility has been earmarked for the promotion of domestic processing of cocoa into finished and semi-finished products to give them more value and create more local jobs.
Under the deal, the COCOBOD would help credible local processors with working capital, particularly through the purchase and supply of cocoa beans from the Cocoa Marketing Company to enable the beneficiary processors expand their production in a bid to help achieve the national target of 50 percent local processing of cocoa beans.
Dr Assibey-Yeboah also indicated that arrangements have already been discussed with the lenders and that any funds not immediately required would be placed in safe interest yielding investments.
He said the cocoa industry plays a crucial role in the economic development of the country and contributes significant to the Gross Domestic Products.
He said the sector employs an estimated two million people along the supply chain and remains a major source of Ghana’s foreign exchange earnings.
Mr Cassiel Ato Forson, Ranking Member in his remark expressed concern about the structure of the US$600 million loan saying the arrangement is not in the best interest of the country.
He said it is not prudent for COCOBOD to go and borrowing an amount of US$600 million, drawdown within two months and using the money over a period of three years was simply not prudent.
“My major concern is the fact that this amount will attract interest from day one and for the fact that some of these monies will be sitting down idle over the period and considering the fact that in times that you have funds sitting idle, there is a chance that one can misapply it, I do believe that this arrangement is not in the best interest of us.”
Mr Forson expressed anxiety that the loan would not be used for the purpose for which it is being procured.
He explained that US$5 million out of the loan has been earmarked to support the National School Feeding Programme with cocoa products for the schoolchildren.
Additionally, the COCOBOD is to spend over US$2.5 million to create awareness and promote the consumption of cocoa products among the people.
He questioned why the state would want to spend its meagre resources on such expenses which, in his view, does not inure to the benefit of the cocoa sector.
Mr Kwame Asafu Adjaye, Chairman on Cocoa and Agriculture Committee in his comment justified COCOBOD’s position to contract the loan saying the facility would help bring improvement is the cocoa sector and enhance the income of the farmers.
He stressed the need for government to encourage the consumption of local cocoa products in order to create demand and also to improve the health of the people.