COCOBOD Ends 32-Year Reliance on International Loans for Cocoa Bean Purchases; Now Turns to Domestic Funding
Ghana has taken a decisive step to end its reliance on international syndicated loans to finance its cocoa sector, breaking with a 32-year tradition that has underpinned the country’s economy.
The Ghana Cocoa Board (Cocobod) announced that it will source funding domestically for the upcoming cocoa season, which begins a month early on September 1.
The decision, revealed by Cocobod’s Chief Executive, Joseph Boahen Aidoo, signals a strategic shift as the board seeks to “wean itself” off external borrowing. Historically, Cocobod has raised at least $1 billion annually through syndicated loans to finance cocoa purchases from farmers and supply essential inputs like seedlings, fertilizers, and chemicals.
However, amid Ghana’s ongoing debt restructuring and faltering cocoa output, the board was able to secure only $600 million last year, as international lenders grew increasingly wary of the country’s creditworthiness.
This pivot to domestic financing comes after reports emerged that negotiations for a $1.5 billion bridge loan from cocoa traders such as Barry Callebaut AG and Olam Group Ltd. had stalled.
The decision to forgo foreign borrowing altogether introduces new challenges for the Bank of Ghana, which has traditionally relied on the lump sum of foreign currency that accompanies the annual syndicated loan to manage exchange rate volatility.
Going forward, the central bank will need to wait for revenue from cocoa sales—denominated in dollars—to gradually build its foreign reserves.
Compounding the pressure on Ghana’s cocoa sector is a reduction in the harvest target for the 2024-25 season by 20% to 650,000 tons, driven by adverse weather, disease, and a lack of fertilizers.
These supply constraints have already pushed cocoa futures prices to exceed $11,000 per ton earlier this year, further complicating the outlook for the world’s second-largest producer of the chocolate-making ingredient.
Cocobod’s move to tap into domestic funding reflects a broader need for resilience in Ghana’s financial strategies amid global uncertainties and internal challenges. As the country navigates this transition, the implications for both the cocoa industry and the broader economy will be closely watched.
Good move. Hopefully this will set the stage to making Ghana business establishments self reliant and eventually bring prosperity to the nation.
The long awaited move has been done now by Cocobod. The syndicated borrowing has always been unsustainable
The implications to farmers and particularly indigenous License Buying Companies will be dire especially for the impending season.Hard times ahead.
when I saw COCOBOD was turning to local funding, I was happy.. then I stopped in my tracks .. Ghana’s governmental agencies are notorious for not paying their bills on time and have even owed contractors many years.. what shows that obtaining financing locally would not be the same scenario? COCOBOD should convince us otherwise.
locally acquired loans must be available in good time for the cocoa season.
Where will Bank of Ghana which made loss over 60billion get financial funding for purchase of cocoa beans. Asem b3ba daabi.
I think that is an audacious move. There will be some tough results that will affect BoG and Financial sector
i am not sure of this move. if cocobod was only able to make $600,000 out 1billion, what does it tell we cocoa farmers. i pray hard time will not force us to turn our backs on COCOBOD.