Grease an 8-inch cake tin and line with parchment paper.
Put chocolate, butter and water in a saucepan. Stir on low heat until melted and combined. Transfer into a large bowl, stir in sugar, and set aside to cool slightly.
Add the eggs and vanilla to the chocolate mixture and whisk until just combined. Stir in the flour and baking powder and whisk until smooth.
Pour into prepared tin and tap on bench to get rid of air bubbles.
Bake for 1 hour, turning the tin halfway through cooking. Cool in the tin for 15 minutes. Remove from tin and let cool completely.
To make the icing: in a large bowl, combine the icing sugar and cocoa. And the butter and milk and mix well.
Place a piece of parchment paper under a wire rack. Pour some shredded coconut into a shallow bowl. Cut the cakes into 2x2-inch squares. Dip each square in icing, roll in coconut and then place on the wire rack to dry. Repeat with the remaining cake.