COCOBOD Targets GH¢13bn Local Funding as Ghana Recasts Cocoa Finance Model

The Ghana Cocoa Board (COCOBOD) is targeting an initial GH¢13 billion from the domestic financial market under a new financing model designed to fund cocoa purchases without relying on the large annual syndicated loans that have historically underpinned the sector.

The proposed structure represents a fundamental change in how Ghana finances its cocoa crop, transferring a greater share of funding risk from international lenders to the domestic capital market while potentially reducing the country’s exposure to foreign-currency borrowing.

COCOBOD Chief Executive Dr Ransford Abbey said the regulator intends to raise roughly half of its estimated crop-financing requirement and recycle the capital during the purchasing season rather than borrow the entire amount upfront.

“So, what we are doing is that if, for example, we need GH¢26 billion to purchase the crop for a time, we don’t intend to go for GH¢26 billion. We intend to go for half the amount, so let’s say GH¢13 billion,” Dr Abbey said during a media sensitisation programme on the proposed Ghana COCOBOD Bill, 2026. (Graphic Online⁠)

The strategy will rely substantially on 270-day commercial notes, with COCOBOD expecting to turn over the GH¢13 billion financing pool twice during the crop cycle.

“Instead of taking GH¢26 billion and paying interest on GH¢26 billion, we will take, let’s say, GH¢13 billion, turn it around twice within those 270 days, and then pay it back. This is how we intend to fund the crop,” he said. (Graphic Online⁠)

A break with syndicated financing

For more than 30 years, Ghana’s cocoa financing architecture was built around annual syndicated loans secured largely against forward cocoa sales. The arrangements provided COCOBOD with foreign-currency liquidity before the start of the crop season, allowing Licensed Buying Companies to purchase beans from farmers.

But that model became increasingly difficult to sustain following Ghana’s debt crisis and restructuring. COCOBOD has consequently been developing an alternative capable of mobilising domestic liquidity while reducing dependence on offshore creditors.

The regulator said earlier this year that the old structure could require 70 per cent to 92 per cent of Ghana’s cocoa crop to be collateralised to offshore financiers, limiting financial flexibility within the sector. (Cocobod⁠)

Under the emerging arrangement, COCOBOD will tap pension funds, banks, asset managers and other institutional investors through cedi-denominated commercial paper and longer-term bonds.

“We need to raise the money this month. We are hopeful that we will be able to raise the money and have an enduring funding policy for cocoa,” Dr Abbey said.

“These 270-day commercial notes will be what we will use, so we are raising the money domestically.” (Graphic Online⁠)

The transition could have broader implications for Ghana’s capital markets. A successful programme would create a substantial new class of domestic securities while giving institutional investors additional investment options.

However, it also introduces risks.

COCOBOD will effectively become a significant recurring borrower in a financial market where government securities already absorb substantial domestic liquidity. The pricing of the cocoa instruments will therefore be critical: yields must be attractive enough to draw investors without making the financing prohibitively expensive for COCOBOD.

Legacy debt complicates transition

The shift comes as the cocoa regulator continues to deal with substantial historical liabilities.

COCOBOD disclosed in February that it owed the Ministry of Finance about GH¢3.7 billion arising from the conversion of non-marketable cocoa bills into a loan, alongside a GH¢1.38 billion 10-year obligation to the Bank of Ghana. The government proposed converting part of roughly GH¢5 billion of legacy debt into equity to strengthen the regulator’s balance sheet. (Cocobod⁠)

The government also transferred GH¢4.35 billion of rationalised cocoa-road liabilities to the Ministry of Roads and Highways as part of attempts to repair COCOBOD’s financial position. (Cocobod⁠)

A further challenge comes from deferred cocoa-bill obligations. COCOBOD faces substantial annual repayments between 2026 and 2028, prompting management to consider refinancing those liabilities over longer maturities. (Graphic Online⁠)

“What we believe will be the right thing to do is to refinance these cocoa bills for a longer time, say, five years,” Dr Abbey said.

“That will mean that we will have less pressure. We will not have to find GH¢26 billion every year for the next three years. So, we will then have to pay a smaller amount over five years.” (Graphic Online⁠)

COCOBOD intends to issue longer-term bonds annually beginning this year as part of that refinancing strategy.

Domestic liquidity becomes central

The economic logic behind the new model is straightforward: Ghana wants more of the financing of its cocoa economy to originate domestically and be denominated in cedis.

That could reduce foreign-exchange exposure and weaken the historical link between annual cocoa financing and Ghana’s external borrowing requirements.

It may also allow more value generated by the cocoa industry to circulate through Ghana’s own financial system.

COCOBOD has said the broader reform will extend beyond crop purchases. Its proposed model is expected to improve financing access for local processors and indigenous companies, potentially strengthening domestic value addition instead of maintaining an industry overwhelmingly centred on exporting raw beans. (Cocobod⁠)

Yet the ultimate test will be whether COCOBOD can raise billions of cedis at sustainable interest rates while ensuring farmers are paid promptly.

The regulator is therefore attempting more than a refinancing exercise. It is trying to reconstruct the financial architecture of an industry that remains one of Ghana’s most important sources of export earnings and rural livelihoods.

If the GH¢13 billion programme succeeds, it could establish a domestic financing mechanism capable of replacing a syndicated-loan structure that defined Ghana’s cocoa economy for a generation.

If borrowing costs prove excessive or investor demand falls short, however, the transition could simply shift financing pressure from international creditors to Ghana’s already heavily utilised domestic capital market.

For COCOBOD, the coming issuance will therefore be an important market test — not only of its own creditworthiness, but of whether Ghana’s financial system has sufficient depth to finance one of the country’s largest and most strategically important export industries.