Joe Jackson, the Director of Business Operations at Dalex Finance, has voiced his concerns regarding the recent invitation by the Ghana Cocoa Board (COCOBOD) for holders of short-term cocoa bills to voluntarily exchange them for new ones.
According to him, the move is another indication of the government’s inability to fulfil its financial obligations.
Jackson argues that the call for exchange is essentially a form of haircut, as the government seeks to spread out the maturities due in August over a five-year period due to its inability to pay them on the designated dates. Comparing it to the previous issue with domestic bonds, he emphasizes that the government and COCOBOD are essentially admitting that they cannot meet their financial obligations.
Speaking to Accra-based Citi FM, the Financial Analyst indicated that “Just like we did with domestic bonds, the government and COCOBOD have come up to say, we can’t pay our bills. Remember that the last Cocoa Bill was issued in February 2023 at a rate of 32.22 percent per annum and this was supposed to have been paid in August, but it will not be paid and any interest and the principal will be rolled up into one figure.”
Using an example, Joe Jackson illustrates how the payments will be divided over a five-year period.
“Let’s say you have Cocoa Bills worth GH¢68 and interest worth about GH¢32 which adds up to GH¢100, 5 per cent of that will be paid in 2024, 20 per cent in 2025, 25 per cent in 2026, 25 per cent in 2027, and 25 per cent in 2028 which means that the monies that you should have received this year plus interest, will be spread over the five years starting in 2024. This is another haircut.”
He however placed the blame for the bill default squarely on COCOBOD, stating that the organization had mismanaged its affairs. He points out that COCOBOD has not published its accounts since 2020 and has diverted funds intended for cocoa purchases toward other activities not aligned with its original purpose.
COCOBOD’s operations have faced significant criticism, particularly regarding its large staff size. Many have expressed concerns over the management and financial practices within the organization.
On July 14, 2023, COCOBOD extended an invitation to holders of its short-term debt securities (cocoa bills) to exchange them for longer-term debt securities. The invitation outlined the terms of the exchange, including the payment of accrued and unpaid interest as the capitalized interest added to the principal amount of the new bonds.
It remains to be seen how stakeholders will respond to COCOBOD’s invitation and what implications this exchange will have for the financial landscape in Ghana.
