Governor of the Bank of Ghana, Dr Ernest Addison, has said lowered interest rates will give room for local banks to participate in the cocoa syndicated loan.

For the 2020/2021 crop season, COCOBOD is seeking to raise 1.3 billion dollars to invest in production.

Various stakeholders in the financial sector have raised concerns about the need for local banks to be a part of the syndication process so funds are retained in the country.

Appearing before Parliament’s Public Account Committee, Dr Addison stated that there is the need to work on interest rates to encourage local banks to fund cocoa purchasing.

“This is an important matter primarily because interest rates in Ghana have been relatively high, therefore, COCOBOD has found the syndication to be cost effective. I think that as we bring domestic interest rates down, then financing the entire crop from domestic resources will be better. We have to work towards financing cocoa purchases from our domestic banking system as we bring inflation rates down,” he said.

The cocoa sector is a major revenue contributor to government revenue and GDP. It employs approximately 800,000 farm families spread over nearly half of the sixteen regions of Ghana and generates about $2 billion in foreign exchange annually.

COVID-19 has made most international trading commodities experience plummeting prices with cocoa also being affected.

This situation has forced some banks to reduce interest rates on loans given to businesses or defer interest payments due to the economic impact of the COVID-19 pandemic.

Already, the Monetary Policy Committee of the Bank of Ghana earlier this year reduced the rate at which it lends to commercial banks by 1.5 percent; from 16 to 14.5 percent.