Ghana is struggling to raise GHS 26 billion on its domestic market to finance cocoa purchases for the 2026/27 season. This difficulty arises as local institutional investors demand higher risk premiums and coupon rates before committing funds. The delay in securing financing has pushed the cocoa season's start past mid-September, weeks after Ivory Coast launched its main crop.
The current funding challenge follows COCOBOD's exit from the offshore syndicated loan market due to escalating interest costs. Historically, COCOBOD secured international loans at rates as low as 1.5% in 2016, but these rates surged to 8%. Ghana's 2022 economic crisis and a GHS 7.93 billion debt exchange further complicated its access to international financing. For the 2024/25 season, COCOBOD shifted to direct financing from international traders, abandoning its long-standing syndicated loan model.
This situation fits into a broader narrative of Ghana's economic adjustments and fiscal pressures. The nation is navigating the aftermath of its 2022 economic crisis, which led to a domestic debt exchange program. The government's pivot to domestic financing for critical sectors like cocoa reflects an effort to reduce reliance on volatile international markets. However, this strategy is now encountering resistance from local investors seeking more attractive returns, highlighting persistent liquidity and risk perception issues within the Ghanaian financial system. The Producer Price Review Committee recently cut the farmgate price to GHS 41,392 per tonne, down from GHS 58,000, effective February 12, further complicating farmer incomes.
Licensed buying companies, represented by the Chamber of Cocoa Marketers, Ghana, warn that GHS 4 billion in unpaid debts from the previous season could prevent them from buying beans. "Banks which extended them credit are pressing for repayment," the Chamber stated, urging the government to settle these outstanding amounts. This debt is a significant hurdle for the smooth operation of the upcoming cocoa season.
The immediate implication is a potential delay in cocoa purchases, directly affecting thousands of Ghanaian farmers. Decision-makers at COCOBOD and the Ministry of Finance must find a way to bridge the funding gap and satisfy investor demands. The market will closely watch the interest rates offered on the new cocoa bonds and the participation of local pension funds and commercial banks. Failure to secure timely financing could disrupt the cocoa supply chain and impact Ghana's foreign exchange earnings from its primary agricultural export. The new Ghana Cocoa Board Act, signed on August 26, guarantees farmers a minimum of 70% of the gross free-on-board (FOB) export value, a factor that will influence future price negotiations. Industry sources also express concern that Ivory Coast's lower farmgate price of 1,200 CFA francs per kg could encourage cocoa smuggling into Ghana.