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Cocoa farmers demand big cocoa price hike to offset cedi slide

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Cocoa price, farmers, Newscenta, inflation, Ghana,
Photo: thecocoapost

October 1 is designated annually as Cocoa Day. It marks the commencement of the cocoa year which ends in September the following year.

Cocoa Day is dedicated to celebrating the work and contributions of smallholder farmers to cocoa-producing economies and also the world cocoa and chocolate industry.

Among others, it raises awareness about the difficult working and economic conditions of the millions of cocoa growers who account for the cocoa beans used in manufacturing the world’s favourite snack – chocolate.

In Ghana, the celebration of Cocoa Day is particularly significant for a number of reasons.

Firstly, it marks the official opening of the main crop season and sets the tone for internal marketing or cocoa buying activities.

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Secondly and most importantly, this is the day the President of Ghana or a representative announces the cocoa producer price or farmgate price for the ensuing cocoa season.

While the announcement is a common yearly ritual, there are quite some reasons to suggest that the yet-to-be-disclosed 2022/23 producer price could either make or break an industry sitting on tenterhooks.

Here are some 5 reasons the Producer Price Review Committee (PPRC) may be considering as it concludes its work.

  1. No cocoa producer price adjustment in 2 years

The prevailing cocoa producer price was first announced by President Nana AKufo-Addo on 24th September 2020 at Sefwi Wiawso, ahead of the 2020/21 Cocoa season.

One metric tonne of cocoa beans was pegged at GH₵10,560, which works down to GH₵660 per 64kg bag.

The same producer price was maintained for the soon-expiring 2021/22 season. In effect, there was no increment.

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The 2020 farmgate price represented a 28% increase over the 2019/20 season’s figure of GH₵515 per bag or GH₵8,240 per tonne.

While announcing the government’s decision to maintain the same price for 2021, the Minister of Food and Agriculture, Dr Owusu Akoto Afriyie, explained that in spite of the fall in the world market price of cocoa, among other factors, such as the effects of the Covid-19 pandemic on the global economy, the producer price of GH₵10,560 per tonne, represented 87.15 % of the FOB value demonstrating government’s commitment towards improving the livelihoods of cocoa farmers.”

But for cocoa farmers, a lot has changed in terms of the economic situation in the country since October 2020, which they contend warrants an increment come hell or high water.

Whereas sections of farmers are expecting a modest 30% raise, still others are demanding GHS1500 for a bag of cocoa beans citing obvious reasons.

Whatever the change to be announced, it does seem certain that the 2022/23 cocoa producer price would either pump up some level of hope among farmers or could be the last straw that breaks the camel’s back.

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  1. Loss of value to Cedi depreciation

The 2020 historic hike in the cocoa producer price was the direct result of implementing the $400-per-tonne Living Income Different (LID), a poverty alleviation bonus agreed upon in 2019 between Ghana and Cote d’Ivoire, on the one side, and cocoa buyers and chocolate companies on the other.

The LID translates to $25 per bag, which in October 2020 converted to GH₵145 at an exchange rate of GH₵5.8 to the USD. That amount added to the previous year’s producer price of GH₵515 summed to GH₵660.

The payment of the full sum of the LID to cocoa farmers was in direct fulfilment of a condition underlying the agreement.

It’s interesting that although there have been exchange rate gains in the last 2 years, at least for the $25-LID component, the farmgate price has remained unchanged.

The GHS660 per bag producer price itself as of the time of the first announcement was worth $114, but is presently worth about $69 at today’s BoG USD-GHS exchange rate of GH₵9.54.

Meanwhile, per Ghana Statistical Service data the inflation rate rose from 9.9% at the end of 2020 to 33.9% at the end of August this year impacting the prices of goods and services and taking a toll on cocoa farmers.

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Definitely, there needs to be some price adjustment to compensate for the over 55% value lost to the already disadvantaged smallholder cocoa farmer, at least in a similar manner as the Cost of Living Allowance (CoLA) recently paid to civil servants.

  1. Exponential rise in input and production cost

Supply chain disruptions occasioned by the Russia-Ukraine conflict have driven a scarcity in the fertiliser and agrochemicals market with its attendant price increase.

Prices of various types of agro-input products on the Ghanaian market have reportedly seen astronomical increases of between 300 – 400%, if available at all.

In the same vein, fuel, transportation and utilities prices have recorded quite significant upward adjustments since the last cocoa producer price increase aggravating the living condition of cocoa growers.

Meanwhile, the cost of labour for farm maintenance is now said to be out of the reach of poor smallholder farmers.

Cash-strapped youth of cocoa communities are reportedly moving in droves to illegal gold mining centres, where galamsey kingpins are believed to offer very competitive daily wages.

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In a nutshell, these circumstances, among others, have consequently shot the cocoa farmer’s cost of production through the roof.

Certainly, there is no gainsaying Ghana’s gallant cocoa farmers require urgent intervention in the compensation paid for their toil in order to sustain their cocoa production efforts.

  1. Galamsey invasion

Information emanating from Ghana Cocoa Board suggests that in a space of 1 year some 19,000 hectares of vibrant cocoa farms were lost to galamsey activities in only two regions.

Some of these farms are said to have been forcibly destroyed by illegal galamsey gold miners, while others were allegedly leased to the miners by land owners, mainly traditional authorities.

However, it is emerging that many frustrated and disillusioned cocoa farmers are now also joining the fray and willingly turning over their farms to galamsey operators in nightmarish cocoa for cash trend, a situation confirmed by the sector regulator – Cocobod.

Recent environmental monitoring and investigative reports indicate that the advancement of galamsey gangs, some of whom are armed to the teeth, is akin to a raging fire devouring water bodies, land and farms alike.

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Judging by the sentiments from cocoa communities and farmers, it is palpably clear that the President’s producer price announcement for the upcoming season wields the wand to either make or break the country’s cocoa sector.

  1. Competition from other cash crops

In some areas in the Central and Western cocoa regions, and indeed in other regions as well, it is reported that some cocoa farmers have begun diversifying into other cash crops.

Certain farm owners in cocoa rehabilitation zones are, for instance, said to be resisting the programme opting instead to grow other commercial plants.

Popular among the alternative cash crops are cashew, rubber and oil palm. The actions of these cocoa farmers are premised on the promise of better incomes and livelihood for themselves and their families.

Perhaps now is the time for cocoa buyers and chocolate companies to walk the talk to improve living incomes for cocoa farmers as well as expand their sustainability programming to cover the remaining 80% of Ghana’s 800,000 cocoa farming families.

Such interventions would no doubt contribute immensely to achieving the sustainability goals of the cocoa and chocolate industry.

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Make or break

Finally, on the occasion of the 2022 Cocoa Day celebration at Suhum, in the Eastern Region, Ghanaian cocoa farmers have made a clarion call for a price increase that not only offers a glimmer of hope and reason to hold their position against illegal gold mining and but also to cushion them against the harsh economic conditions felt by all and sundry across the nation.

But while the expectation of farmers remains high, and understandably so, it is also worth noting that the international market prices for cocoa have plummeted from a 2020 average of $2500 per tonne to $2200 per tonne in 2022.

Ghana Cocoa Board July this year announced it has had to subsidise the producer price of cocoa to the tune of $400 million yearly as world market prices tumbled amidst the erosion of origin premiums by buyers.

Within that period, Ghana’s neighbour Cote d’Ivoire has reduced its own cocoa producer price by 9% to the current CFA41250 per bag converting to GH₵628.31, which is lower than the GH₵660 Ghana pays.

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However, should Ghana fail to increase the price of cocoa and Cote d’Ivoire goes ahead to announce a price increase higher than that of Ghana fears are that it could spark a wave of cross-border smuggling.

 

By Kojo Hayford (www.theCocoaPost.com)

Finance

Ghana’s IMF deal and the bumpy journey of Paris Club debt relief  

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Paris Club, Newscenta, Creditor Committee, IMF, Ghana, China,

International Monetary Fund (IMF) Board approval for Ghana’s $3 billion bailout package cannot be pinned down to a specified date.

This is because, even if the Paris Club members sets up a Creditor  Committee on Ghana this week after discussions with a Ghanaian delegation led by Ken Ofori-Atta, the duration for the Committee to complete its work is not certain.

Paris Club creditors financing assurances to IMF

Paris Club creditors are expected to provide financing assurances to support the approval by the IMF Executive Board.

Previous cases

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Ghana ought to be guided by previous cases, where forming a creditor committee took a couple of months.

Creditor committee for Chad took 15 months

For example, the creditor committee for Chad was formed on April 15, 2021 and it met virtually 15 months later on September 13 and 27, 2022, in presence of the IMF staff and the World Bank staff.

Interestingly, the creditor committee examined the latest developments on the macroeconomic and financial situation of Chad and noted that no debt relief from official bilateral creditors was needed given the surge in oil prices at the time after the approval of the IMF upper credit tranche (UCT) programme by the Executive Board on December 10, 2021.

Sri Lanka’s IMF request took almost 1 year

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It took Sri Lanka almost one year to secure approval for $2.9bn (£2.3bn) bailout yesterday, March 20, 2023.

Creditor Committee for Ethiopia took nearly 1 year

The creditor committee on Ethiopia first met On September 16, 2021,

The creditor committee met virtually again on July 19, 2022 and in August 2022, agreed to provide debt relief.

Unnamed IMF official hints of one month for Ghana

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But, Ghana can only hope for a speedy process as hinted by an unnamed IMF official who in January said the Paris Club members are all ready to do so for Ghana and hoped it could be done in a month.

The official said Ghana’s case was less complex than Zambia, whose case the official said was progressing after struggling since it became the first African country to default after the pandemic.

Zambia applied in February 2021

In February 2021 Zambia officially applied for a debt treatment under the common framework agreed by the Group of 20 (G20) major economies and the Paris Club.

Zambia’s Creditor committee formed on June 16, 2022

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The creditor committee for Zambia was formed on June 16, 2022, in application of “Common Framework for Debt Treatments beyond the DSSI.

World Bank and IMF officials keep pressing Zambia’s creditors to accelerate negotiations on reducing the country’s official debt burden but an agreement is only expected this year.

When Ghana can submit report to IMF Board

Even if the Creditor Committee completes its work in record time of one month, it means Ghana can only submit the report to the Executive Board of IMF in May.

Date Executive Board of IMF can meet on Ghana

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After submission, how long it will take the IMF Board to meet and approve Ghana’s deal is not known.

Revenue measures

On revenue measures, Income Tax (Amendment) Bill, Excise Duty & Excise Tax Stamp (Amendment) Bills as well as the Growth and Sustainability Levy Bill, are outstanding in Parliament.

The consideration and approval of these fiscal measures by Parliament are critical to securing IMF Board approval.

IMF Board approval is expected to restore macro-economic stability, ensure debt sustainability as well as provide critical social protection for the benefit of Ghanaians.

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Ghana and the International Monetary Fund (IMF) have reached staff-level agreement on economic policies and reforms to be supported by a new three-year arrangement under the Extended Credit Facility (ECF) of about $3 billion.

The passage of the Bills will enable government to complete four out of five agreed Prior Actions in the Staff Level Agreement.

Agreed prior actions fulfilled

Tariff adjustment by the Public Utilities Regulatory Commission (PURC), Publication of the Auditor-General’s Report on COVID-19 Spending, and onboarding of Ghana Education Trust Fund (GETFund), District Assemblies Common Fund (DACF) and Road Fund on the Ghana integrated financial management information system (GIFMIS) have all been completed.

COVID-19, Russia-Ukraine war, soaring energy and food prices, higher interest rates, a strong dollar and a global slowdown negatively affected the economy.

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The international and domestic bond markets are shut for the financing of government’s programmes, forcing government to rely on the Treasury Bills and concessional loans as the primary sources of financing for the 2023 fiscal year.

Government therefore needs Parliament to support its financing requests to ensure a smooth recovery from the economic challenges.

Debt Service Suspension Initiative
The Debt Service Suspension Initiative (DSSI) was a historic and exceptional measure taken jointly by the G20 and the Paris Club on April 15, 2020 to offer support to 73 eligible low-income countries as they weathered the Covid-19 crisis.

Tanzania benefitted from debt service due suspension

Tanzania benefitted from an extension of the time-bound suspension of debt service due from   January 1 to June 30 2021.

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Pakistan benefitted from debt service due suspension

Pakistan also benefitted from an extension of the time-bound suspension of debt service due from July 1 to December 31 2021.

Cabo Verde benefitted from debt service due suspension

Cabo Verde also benefitted from an extension of the time-bound suspension of debt service due from July 1 to December 31 2021.

Burkina Faso benefitted from debt service due suspension

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Burkina Faso also benefitted from an extension of the time-bound suspension of debt service due from July 1 to December 31 2021.

Nepal benefitted from debt service due suspension

Nepal also benefitted from an extension of the time-bound suspension of debt service due from July 1 to December 31 2021.

Kyrgyz Republic benefitted from debt service due suspension

Kyrgyz Republic benefitted from an extension of the time-bound suspension of debt service due from July 1 to December 31 2021.

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Suriname got Paris Club creditors financing assurances for IMF

Paris Club creditors provided financing assurances to support the approval Suriname’s request by the IMF Executive Board

 Zambia benefitted from debt service due suspension

Zambia benefitted from an extension of the time-bound suspension of debt service due from July 1 to December 31 2021.

Mozambique benefitted from debt service due suspension

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Mozambique benefitted from an extension of the time-bound suspension of debt service due from July 1 to December 31 2021.

From May 1, 2020 to December 31, 2021, Paris Club creditors suspended around $4.6 Bn of debt service due by 42 low income countries that signed an agreement with the Paris Club.

Paris Club treated $614bn debt since 1956

Since the Paris Club was formed in 1956, it has reached 478 agreements with 102 different debtor countries and the debt treated in the framework of Paris Club agreements amounts to $614 billion.

 

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COCOBOD intercepts over 1,500 bags of cocoa being smuggled

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Cocoa, smuggling, Newscenta, arrests, COCOBOD, Taskforce,

Ghana Cocoa Board’s (COCOBOD) Anti-smuggling Task Force in collaboration with the security agencies, has within two weeks, retrieved over 1,500 bags of cocoa, enroute to be smuggled to neighbouring countries.

According to the Director of Special Services at COCOBOD, Mr. Charles Amenyaglo, the win scored against smugglers between the first two weeks of March was through a system instituted by COCOBOD, which comes with incentives for collaborators.

He disclosed that the beans originated from the Western North and Volta regions while arrests were made in the Greater Accra, Volta and Western North regions during transit of the cocoa beans.

In the Greater Accra region, the Mamprobi Police Unit on March 6, following a tip off intercepted 508 bags of standard cocoa beans and 72 bags of cocoa waste beans which was transported from Sefwi Bekwai in a Howo Truck with registration number GS 854-21.

The driver, Abdul Rahman Amadu alleged that he was contracted at a lorry station to load the cocoa beans to Accra.

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He was in the process of re-bagging the beans from jute sacks into polythene sacks in order to evade security checks when he was arrested at a school in Mamprobi, which served as the offloading point.

Rahman and two others believed to be labourers have been granted bail with one surety each and are to reappear before the Circuit Court 6 in Accra on April 13.

According to Mr. Charles Amenyaglo, the cocoa beans was released to COCOBOD the next day to prevent deterioration.

“The beans were not thoroughly dried before they were transported and some were drenched in rain water through transit. We had to immediately evacuate them to our Take-Over Centre at Tema for drying, reconditioning and rebagging.”

Following this, 511 bags of good cocoa beans, weighed at 64kg per bag and 123 bags of waste cocoa beans weighed at 50kg per bag was collected.

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Cocoa, smuggling, Newscenta, arrests, COCOBOD, Taskforce,

The Anti-Smuggling Taskforce of COCOBOD also saved about 399 bags of cocoa beans from smugglers who were carting them from Dunkwa-on-Offin and Sefwi Bekwai in the Western North region to the Ivory Coast on March 13.

The trucks with registration numbers, AS 885 – 19 and AS 7457 – 17 have been impounded while the drivers have been granted police enquiry bail pending further investigations.

Meanwhile, a 42-year-old Nigerian national, Isaac Oluwaje who claims ownership of 406 bags of cocoa beans, which was intercepted by a surveillance team of the Special Services Directorate of COCOBOD while being conveyed to Togo through the Volta region, has also been arrested.

Oluwaje claims he bought the cocoa through a business contact at Bonsu Nkwanta in the Western North region for reselling in Togo.

Together with the driver of the track with registration number GX 7632 – 14, Oluwaje had rebagged some of the cocoa beans in poly sacks to avoid detection.

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Both are still in Police custody after failing to meet bail conditions following an arraignment before court.

Also in the Volta region, a Circuit Court in Denu has remanded two suspected cocoa smugglers into custody.

The suspects, acclaimed owner of the beans, Ebenezer Tetteh and a truck driver, Francis Awuah were arrested on March 13 following a collaborative operation between COCOBOD and the Aflao Command of the National Investigation Bureau (NIB).

The truck with registration number GX 8579 – 22 moved uninterrupted through the Tema Motorway in the Greater Accra region to the Volta region where they were arrested while crossing Ghana’s major border post to Togo.

Mr. Amenyaglo described as worrying, that discreet checks showed that the truck drove past officials of other State Security Agencies unchecked until it was stopped by an NIB officer at the border.

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He also disclosed that attempts were made to influence the officer with an amount of 25,000 cedis to release the truck of cocoa beans.

He said COCOBOD will continue to work with Security Agencies to thwart the efforts of smugglers and called for the public to volunteer information to help arrest culprits. He assured of anonymity and reward for all informants.

In Ghana, the law requires Cocoa farmers to sell their cocoa beans to certified Purchasing Clerks who act as agents of the Cocoa Marketing Company, a subsidiary of COCOBOD that oversees the purchase of cocoa beans on behalf of government.

Ghana recorded a shortfall of 300,000 metric tonnes of cocoa in the 2021/2022 crop season, the lowest in 15 years due to a myriad of challenges including over-aged plants and climate change. There are fears that smugglers would worsen the shortfall in the current crop year if not nipped in the bud.

People have been illegally transporting, or smuggling, cocoa beans between Ivory Coast and neighboring Ghana for many years.

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Cocoa smuggling between Ghana and Ivory Coast is quite common, with its direction shifting back and forth depending on the price difference between the two countries.

Cocoa, smuggling, Newscenta, arrests, COCOBOD, Taskforce,

Ivory Coast raised its cocoa producer price per bag by nine per cent from 825 to 900 CFA franc.

The cedi equivalent of the 900 CFA Franc per bag of cocoa weighing 64 kilogramme gross is GH₵850.

Ghana also raised the producer price of cocoa by 21% to GH₵800 per bag for the 2022/2023 season effective October 7, 2022.

The producer price for 2022/2023 cocoa season by 21%, far higher than the nine percent in Ivory Coast, the price per bag in Ghana is GH₵800 which is GH₵50 lower than the GH₵850 per bag in Ivory Coast.

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The sharp depreciation of the cedi last year is said to be the reason the price per bag is higher in Ivory Coast despite that country raising farmgate price by just nine per cent compared to the 21% increase by Ghana.

People have been illegally transporting, or smuggling, cocoa beans between Ivory Coast and neighboring Ghana for many years.

As long as buyers in Ivory Coast will pay more for Ghana’s higher-quality beans, the smuggling is a lucrative.

Ghana recorded a shortfall of 300,000 metric tonnes of cocoa in the 2021/2022 crop season, the lowest in 15 years due to a myriad of challenges including over-aged plants and climate change.

There are fears that smugglers will worsen the shortfall in the current crop year if not nipped in the bud.

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It is the illicit flow of cocoa from Ghana to her next door neighbours that constitutes the major loss of economic wealth

Ghanaian security officials at the borders who permit smuggling should be dealt with ruthless for causing financial loss to the state.

 

 

 

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Judge flees after alleged violent attack on his residence

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Judge flees, Newscenta, Bolgatanga, Upper East, attack on residence,

Justice Alexander Graham, a Bolgatanga High Court Judge has allegedly fled the Upper East Region after his residence was allegedly attacked by unknown persons on Wednesday, March 15, 2023.

The Ghana News Agency gathered that some unknown persons pelted stones at his house which prompted the security of the judge to call for reinforcement.

The attackers immediately left the scene after sensing the arrival of the reinforcement team, comprising the Ghana Police Service and the military.

On Thursday, March 16, 2023, the acting Supervising High Court Judge of the region was escorted out of the region to Accra.

The reason for the attack is currently unknown, however, it came a few days after the judge presiding over cases in the High Court Two in Bolgatanga convicted two people for contempt of court.

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The two are Naab Nyakora Maantii, the Divisional Chief of Baare and Mr Richard Sunday Yinbil, Secretary of Talensi Traditional Council.

It has been reported that the two led a delegation sent by Tongraan Kugbilsong Nanlebegtang, Paramount Chief of the Talensi Traditional Area to request a private meeting with Justice Graham to discuss cases filed from the Traditional Area and were pending before the court the judge was presiding over.

The Judge stormed out of his chambers where the delegation met him and ordered the security in the courtroom to arrest them and charge them for contempt.

The accused pleaded guilty and were subsequently convicted on their own plea.

The Judge described the action from the Palace as an attempt to influence his decision and entrap him and asked them to sign a bond of good behaviour with the Upper East Regional Police Command for a period of six months following several appeals from lawyers in the court when the Judge initially wanted to jail the two persons.

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The court did not sit on Thursday and Friday as a result of the attack on the Judge which left persons who had cases to be heard stranded after waiting for several hours.

Meanwhile, a statement from the Talensi Traditional Council and signed by Naab Tampelsong Kun Gaadzom, Divisional Chief of Tindongo, admitted to sending two of its members to Justice Graham to invite him to the Palace for a meeting but refuted claims of influence and entrapment.

The statement noted that the Judge had on several occasions referred cases to the Talensi Traditional Council for resolution and therefore, the request was for the Judge to help the Traditional Council resolve land litigation issues in the area according to its Customary Land Secretariat.

At a press conference, the National Patriots Against Injustice and Corruption Ghana (NAPAIC-Ghana), described the attack on the Judge as “barbaric, uncalled for and shameful” and urged the Chief Justice Kwasi Anin-Yeboah to as matter of urgency, strengthen security to protect Justice Graham, his family and property.

Mr Zumah Tii-roug, Member and Recorder of NAPAIC, who spoke at the press conference, urged the security agencies to conduct a search and investigation to bring perpetrators of the crime to book to serve as deterrent to others.

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“There are fears in the region that Justice Alexander Graham would be transferred from the region in the wake of the attack, and this would serve as a bad precedent should he be transferred.

This is so because anytime judgment would be given against litigants, they would resort to this kind of attack on the judge in the hope that the judge would be transferred.

GNA

 

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