Minister of Food and Agriculture, Dr. Bryan Achaempong, has revealed that major cocoa processors, rather than traditional banks, will play a pivotal role in financing the Ghana Cocoa Board (Cocobod) as it prepares for the 2024/2025 cocoa season. This marks a strategic shift in how Cocobod plans to address potential funding shortfalls, with the focus now on direct agreements with processing entities at prevailing market prices.
Speaking at the August Economic Press Briefing held at the Ministry of Finance, Dr. Achaempong addressed concerns about local banks’ reluctance to finance Cocobod’s cocoa bean purchases. He emphasized that the “alternative funding” being pursued by the government will predominantly come from these direct deals with processors, a move he believes will deliver greater benefits to Ghanaian farmers. “We are engaging directly with them at world market prices, which could lead to more favorable outcomes for our farmers,” he noted, though he refrained from naming specific companies due to ongoing negotiations.
This announcement comes as Cocobod plans to overhaul its cocoa financing strategy for the upcoming season, shifting away from the traditional reliance on syndicated loans and towards more direct, uncollateralized sales agreements. While this break from a 30-year tradition has sparked skepticism regarding its motives and feasibility, the Agriculture Minister argued that the shift is designed to take advantage of rising cocoa prices and increase returns for local farmers.
Finance Minister Dr. Mohammed Amin Adam also addressed stakeholders, confirming that while syndicated loans will still play a role in the 2024-2025 season, their scale will be significantly reduced. He noted that while Cocobod initially sought up to US$1.5 billion through syndication, the actual figure is likely to be closer to US$600 million—a notable decrease from previous years, where syndicated loans typically ranged from US$1 billion to US$1.2 billion.
Dr. Achaempong provided further insight into the strategic change, explaining that Ghana intends to increase its reliance on uncollateralized sales, potentially raising them from the current 10-30 percent of total sales to a more substantial share. This shift is driven by recent market dynamics, which have seen cocoa prices surge from US$2,800 per tonne to approximately US$10,000 per tonne.
This new approach is expected to offer more flexible pricing and potentially higher returns for Ghanaian cocoa farmers, who have often been unable to reap the full benefits of global price increases due to pre-existing commitments through syndicated loans. By reducing the dependency on pre-season loans with fixed prices, the government hopes to ensure that rising global cocoa prices translate into greater benefits for local producers.
This financing strategy shift comes as Ghana navigates broader economic challenges. Dr. Adam also mentioned ongoing negotiations with private banks and contractors concerning an outstanding US$2.8 billion debt, indicating that the government has directed its advisors to present offers to commercial creditors.
