Economist, Dr Patrick Asuming, has revealed that the reduction of cocoa syndicated loans to purchase cocoa beans for the next crop season will not adversely affect the strength of the cedi.
According to him, the loan will not “substantially” affect foreign exchange inflow for government to support the cedi against dollar.
He indicated that government is not servicing its foreign loan so in some sense, even though ordinarily it should have been bad news for the local currency, because of the current circumstances, it wouldn’t have too much of an impact.
“Not substantially. I think we’ve seen from the recent summary of economics and financial data the country is earning a lot more form other countries. We realized that compared to last year, we’ve raked in more and also at the moment, because of the debt restructuring, we are not really paying off our foreign debt…”
Dr Patrick Asuming
Governor of Bank of Ghana, Ernest Addison, revealed that COCOBOD is expected to raise $800 million in coming weeks as part of its cocoa syndication programme to support purchase of cocoa bean for the next crop season.
Reacting to this, Dr Asuming stated that the decision does not necessarily portend a bad signal that Ghana is unable to rake in more from sale of cocoa beans. Conversely, he noted that it may probably send signal of some difficulties that COCOBOD has experienced in the last year or so.
“So, obviously, either we are not going to produce the usual quantities we produce, and therefore we need a low amount. But my point is that it’s not to do with having challenges with the securing more of the cocoa syndicated loan because we’ve seen it is out there that there’s been some problems with COCOBOD in the last year – not necessarily the cocoa production, but COCOBOD has some challenges. So, my point is that that could be the reason why it had to go for a low amount.”
Dr Patrick Asuming
Processing of cocoa
Furthermore, Dr Asuming expressed the need for government to look more into processing of cocoa which will be crucial for the economy. He explained that in recent times there’s been a few industries come up doing some processing, although those are on a smaller scale.
“I think we need to [increase] the expansion of processing of cocoa for different things not just chocolate, but do more research to see what else we can process the cocoa beans for that we add value and are able to get more for our cocoa production…”
Dr Patrick Asuming
Commenting on whether the reduction in cocoa syndicated loans will decline in cocoa production despite increment of farmgate price, Dr Asuming highlighted that these loans are only contracted to purchase the cocoa beans that has been produced.
He elaborated that although this is the start of a major purchase season, the loans are not necessarily used to “expand” cocoa production.
“In the last couple of years, we’ve had challenges with people selling their cocoa farms for galamsey, we’ve had challenges with supply of fertilizers to cocoa farmers. I think those are the ones that pose significant challenges to production. You expect that in a year where we’ve seen significant increase in the producer price, we should anticipate that next year production will be higher.”
Dr Patrick Asuming
Moreover, Dr Asuming expressed the need for government and stakeholders to address the supply side constraint that cocoa farmers face by way of supply of fertilizer and related input. He stated that once the challenges are left unresolved, then they are bound to still recur next year.
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