Ghana struggles to raise local funds for delayed cocoa season as investors demand higher returns

Ghana is facing challenges in raising local funds to finance cocoa purchases for the upcoming 2026/27 season, according to sources familiar with the sector. Licensed buyers assert that GH¢4 billion ($350 million) in unpaid debts could impede their ability to purchase beans from farmers. The Ghanaian cocoa season, which commenced in early August last year, has not yet started, more than two weeks after Ivory Coast, the world's leading producer, launched its main crop.

Ghana's institutional investors are demanding a higher risk premium and coupon rate before investing. The high interest costs have already pushed COCOBOD, the Ghanaian regulator, out of the offshore syndicated loan market. Before 2022's economic crisis, COCOBOD utilized syndicated loans from international banks at rates as low as 1.5%, but the rate increased to 8%. Attempts to secure a $1.5 billion facility in 2024 encountered setbacks.

The syndicated funding dried up following Ghana's 2022 economic crisis, trapping about GH¢7.93 billion of COCOBOD's cocoa bills within the 2023 debt exchange. For the 2024/25 season, COCOBOD abandoned the syndicated loan model and opted for direct financing from international traders instead.

Rollover contracts have further increased the risk. In the 2023/24 season, COCOBOD had projected an output of 800,000 tonnes but harvested only 432,145 tonnes, resulting in a rollover of 333,767 tonnes at an average price of $2,661 per tonne, far below market levels. This situation cost COCOBOD an estimated $941.58 million in lost revenue.

In February, Finance Minister Dr. Cassiel Ato Forson announced that Ghana would now raise its cocoa funds through domestic bonds issued on COCOBOD's balance sheet. The bonds aim to create a revolving fund for purchasing beans during each crop year, with export earnings used to repay the bonds within the same season. The Producer Price Review Committee has reduced the farmgate price from GH¢58,000 ($2,587 per bag) to GH¢41,392 ($2,587 per tonne), with the finance minister blaming the "unwillingness of buyers to purchase Ghana's cocoa" due to its uncompetitive and expensive nature.