The Central Bank of Ghana (BoG) in its responds to a report that has sparked anxiety and fear in the investor community, has agreed with Ghana Cocoa Board (COCOBOD) and commercial banks to use COCOBOD’s deposits/placements at the banks to cater for retail customers who may not want a rollover of their cocoa bills.
BoG at a meeting held on Friday, 20th January, 2023 among the banks and COCOBOD, instructed all banks not to pay customers their maturing cocoa bills investments and as well roll over their maturing cocoa bills for Tender 6155.
Unknowingly to BoG, most of the Cocoa bills, like the Bank of Ghana bills which were designed as instruments to be held just by Financial Institutions were rather sold to retail client, hence the decision of rolling over tends to affect the individual customers and not the institutions as perceived by the central bank.
BoG has therefore instructed all banks to settle the affected retail customers with COCOBOD’s deposits.
“Financial Institutions agreed to roll over their cocoa bill’s investments. Cocoa bills, like the Bank of Ghana bills, were designed as instruments to be held just by Financial Institutions.
“Unfortunately, it has come to the notice of the Bank of Ghana that some Financial Institutions sold their instruments to their retail clients. To reduce the cash flow challenges on retail holders of cocoa bills, the Bank of Ghana, Cocobod and the commercial banks have agreed to allow banks to use Cocobod’s deposits held at the various banks to cater for retail customers who may not want a rollover of their cocoa bill.”
Bank Of Ghana
In a statement, the Central Bank said it expects that this short-term cash flow challenges facing COCOBOD will be resolved soon to enable the cocoa regulators meet its obligations to investors.
“COCOBOD has assured us that the outlook for the 2023 crop season is good, and Cocoa purchasing are ahead of last year. We therefore expect that this short-term cash flow challenges facing Cocoa Board will be resolved soon to enable COCOBOD to meet its obligations to investors.”
Bank of Ghana
BoG Directs Banks To Roll Over Cocobod Investors’ Bonds
It can be recalled that on Thursday, January 19, 2023, a six-month Cocoa bill with face value of Gh¢940.42 million matured. The Central Bank in its statement disclosed that it went through the usual processes to reissue on behalf of COCOBOD a new six-month Cocoa bill to raise funds to cover the maturing obligation, but unfortunately, the auction failed and was severely undersubscribed resulting in a shortfall of Gh¢855.42million.
Many had bought the old six month bills expecting to be paid back their monies and returns on Thursday January 19, 2023.
Investors disclosed monies were actually deposited into their account on Thursday, January 19, 2023 only to be reversed on Friday, January 20, 2023 without their consent.
The banks pointed to a directive from the Bank of Ghana ordering them to unilaterally roll over the bonds without first seeking the consent of investors.
The affected investors expressed shock at the development since the money was rolled over without their permission to go ahead.
“We were told that T-Bills were not going to be touched. If T-Bills were not going to be touched, Cocoa bills were even safer because they are cocoa bonds instruments so I was just shocked. I was surprised that COCOBOD will default in payment.
“I had plans for the money. I don’t know what I can even do about it because it is something that I had planned that I was going to pay my wife’s fees with it. Now I don’t even know how to go and break the news to my wife, because I told her that it was going to happen.”
A disappointed customer
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