(Ecofin Agency) - The Ivorian government plans to tighten cocoa export rights’ granting condition, two sources at the Cocoa Coffee Council (CCC) told Reuters.
This measure aims to avert new payment defaults from local exporters. Bidders for export rights will now have to obtain strong financial commitments from banks and counterparties involved in their operations. Similarly, CCC intends to fine banking institutions for engaging in risky dealings with exporters.
Reuters’ analysts report that this strengthening strategy is expected to further reduce the number of entities licensed as cocoa exporters in 2018/2019. While this number shrunk from 93 in 2016/2017 to 72 in 2017/2018, it could further decrease to 30-40 for the next campaign.
According to the analytical firm KPMG, small-scale exporters defaulted on 148,000 tons of cocoa in 2016/2017, causing a shortfall of CFA100-200 billion for Ivorian banks as they pre-financed purchases through loans.