In a radical transformation of the country's agricultural financing mechanism, one of the country's leading politicians, Alan Kyerematen, has promised to abolish the very controversial Cocoa Syndicated Loan Scheme if voted into power. The pronouncement, when he spoke to farmers and industry stakeholders in Kumasi, signals a major policy shift in the debate on cocoa sector financing.
This is a system whereby, over time, the government borrowed large sums of money from international banks for the purchase of cocoa from farmers. Detractors believe there has been unsustainable indebtedness with hardly any tangible benefits for cocoa farmers from that syndication. Alan's commitment to dissolving this system means reason for some to celebrate while engendering concern among various constituencies.
Alan Kyerematen committed to a financial system more transparent and farmer-friendly. "The current syndicated loan system has only burdened our country with escalating debt while failing to improve the livelihoods of our hardworking cocoa farmers," he said. "It is time to implement a sustainable financing model that empowers farmers and ensures the long-term viability of the sector.
The idea of Kyerematen is to reroute the funds toward the development of support for local banks, agricultural extension services, and investment in infrastructure that is vital for the growth of the cocoa industry. His plan also looks to reduce dependency on foreign loans, which he sees as inimical to the nation's economic independence.
Still, other experts remain skeptical about the realism of such a proposal and assert that the syndicated loan arrangement has been fundamental in the stabilization of the prices of cocoa and, therefore, the regularization of its supply. They believe taking this off without any real, functional alternative might destabilize the sector and affect farmers adversely in the short run.
But Alan's pledge has called into question the future of cocoa financing and even wider reform of the country's agricultural policy. With the election just a few days away, it remains to be seen how this policy proposal will go down with the electorate and industry leaders.
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