BY DANIEL BAMPOE
Ghana’s cocoa sector is facing a fresh financing challenge ahead of the 2026/27 crop season, with difficulties in raising funds on the domestic market threatening to constrain the purchase of cocoa beans from farmers.
Sources familiar with developments in the sector told JoyNews Research that the country is struggling to mobilise the funds required to finance cocoa purchases, while licensed cocoa buying companies are warning that about GH¢4 billion in unpaid debts could further complicate the new season.
The financing challenge comes at a critical time for Ghana’s cocoa industry. Although the new cocoa season is expected to have started by this period, the 2026/27 campaign had yet to begin by mid-September, more than two weeks after neighbouring Ivory Coast, the world’s leading cocoa producer, launched its main crop.
At the centre of the difficulty is the cost of borrowing. Sources said local institutional investors are demanding higher risk premiums and coupon rates before committing funds to the cocoa financing programme, raising concerns about the cost of mobilising the billions of cedis required to purchase beans from farmers.
The model allowed the regulator to raise substantial amounts of foreign financing for the purchase of cocoa beans during each crop season. However, borrowing costs have risen sharply since Ghana’s economic crisis.
COCOBOD had previously secured syndicated facilities at rates as low as 1.5% in 2016, but the cost subsequently increased to about 8%.
The financing environment became particularly difficult after Ghana’s 2022 economic crisis, with syndicated funding drying up.
COCOBOD also had approximately GH¢7.93 billion in cocoa bills caught up in Ghana’s 2023 domestic debt exchange programme.
In 2024, the board encountered difficulties in an attempt to secure a $1.5 billion syndicated facility, forcing a fundamental rethink of how the country’s cocoa purchases would be financed.
For the 2024/25 season, COCOBOD abandoned the syndicated-loan model for the first time since 1992 and instead relied on direct financing from international cocoa traders.
Industry sources, however, say returning to the international syndicated market could still expose the regulator to high borrowing costs.
The financing challenge has also been compounded by problems surrounding cocoa rollover contracts. During the 2023/24 season, COCOBOD had projected cocoa production of approximately 800,000 tonnes.
Actual production, however, fell to 432,145 tonnes, leaving the regulator with 333,767 tonnes that had to be rolled over at an average price of $2,661 per tonne.
The contracts were concluded at prices below subsequent market levels, resulting in significant foregone revenue.
COCOBOD’s Chief Executive estimated the cost of the rollover arrangements at approximately $941.58 million in foregone revenue.
Those rollover contracts subsequently became an important factor in the trader-financing model used to replace syndicated loans.
Finance Minister Dr Cassiel Ato Forson has explained that international buyers were initially attracted by the rollover price of $2,661 per tonne when the market price was around $2,000.
But as the gap between the contracted price and market price narrowed, the financial incentive for traders diminished.
Dr Forson subsequently described the model as unsustainable, forcing the government to explore a domestic financing alternative.
In February, Dr Forson announced plans for Ghana to rely increasingly on its own domestic financial market to fund cocoa purchases.
Under the proposed arrangement, cocoa bonds are expected to be issued domestically on COCOBOD’s balance sheet to create a revolving fund for purchasing cocoa beans during each crop year.
The plan is for export proceeds generated from cocoa sales to be used to retire the bonds within the same season.
COCOBOD is targeting several categories of investors, including local pension funds, commercial banks, international investors and other participants in the cocoa value chain, under its commercial paper programme.
COCOBOD’s Deputy Chief Executive for Finance and Administration, Ato Boateng, has identified pension funds as a key anchor for the programme.
Dr Forson has also stressed that the financing arrangement will not depend exclusively on Ghanaian commercial banks, with pension funds and non-resident investors expected to participate..
The Chamber of Cocoa Marketers, Ghana, which represents licensed buying companies, estimates that the sector could require approximately GH¢26 billion to finance the 2026/27 season if the farmgate price increases by the expected 6%.
COCOBOD Chief Executive Dr Ransford Abbey has said that if the crop requires GH¢26 billion, the board intends to raise approximately half of the amount through 270-day commercial notes.
