Ghana Faces Funding Challenge as Cocoa Season Delays

Ghana is facing growing pressure to secure enough funding for the 2026/27 cocoa season, with domestic investors demanding higher returns before committing money to the sector.

The funding challenge comes as the start of the new cocoa season has been delayed, while Licensed Buying Companies (LBCs) are warning that outstanding debts owed by the Ghana Cocoa Board (COCOBOD) could make it difficult for them to return to the farms and purchase beans from farmers.

Sources familiar with the cocoa sector say local institutional investors are seeking higher coupon rates and risk premiums before providing financing for cocoa purchases.

Cocoa season yet to begin

Ghana traditionally begins its main cocoa season around this period. However, by mid-September 2026, the 2026/27 campaign had not yet officially started.

The delay has raised concerns across the industry, particularly because Côte d’Ivoire, the world's largest cocoa producer, has already opened its main crop.

The funding difficulties are also coming at a time when LBCs are dealing with significant outstanding payments. The Chamber of Cocoa Marketers Ghana says COCOBOD owes its members close to GH¢4 billion from the previous season.

According to the Chamber, the unpaid money is making it difficult for buying companies to secure fresh credit, while some are still servicing loans used to finance earlier cocoa purchases.

Higher cost of financing

Ghana's move towards domestic financing follows difficulties in accessing the international syndicated loan market.

For more than three decades, COCOBOD relied heavily on syndicated loans from international banks to finance cocoa purchases. However, the cost of borrowing increased significantly following Ghana's economic crisis.

COCOBOD was previously able to secure financing at interest rates as low as 1.5% in 2016. By later years, borrowing costs had risen considerably, while efforts to secure a $1.5 billion facility in 2024 encountered difficulties.

The situation was further complicated by Ghana's 2023 domestic debt restructuring, which affected about GH¢7.93 billion in cocoa bills.

For the 2024/25 season, COCOBOD moved away from its traditional syndicated-loan arrangement and instead relied on direct financing from international cocoa traders.

COCOBOD turns to the local market

The government has now been working on a new financing structure that would allow COCOBOD to raise funds locally.

Under the proposed arrangement, COCOBOD would use instruments such as commercial paper and commercial notes to raise money from Ghana's domestic financial market.

The plan is to create a revolving financing system in which funds raised during the season would be used to purchase cocoa, with export proceeds later used to repay the financing.

COCOBOD has identified pension funds, commercial banks, international investors and other players within the cocoa value chain as potential sources of funding.

COCOBOD Chief Executive Dr Ransford Abbey has previously expressed confidence that the local financial market can support the new model. The board has indicated that domestic investors could provide a significant portion of the funds required each year.

LBCs say GH¢4 billion debt is a major concern

Licensed Buying Companies remain particularly concerned about the outstanding payments.

Victus Dzah, Chief Executive Officer of the Chamber of Cocoa Marketers Ghana, said some LBCs are struggling to obtain new financing because COCOBOD has not settled its debts.

He said some companies are borrowing at interest rates of as much as 40%, placing additional pressure on their operations.

The Chamber has therefore called on the government and COCOBOD to address the outstanding debt before the new season begins.

It has also raised concerns about the lack of clarity surrounding the new financing arrangement, saying LBCs need to understand how the system will work before they can adequately prepare for the season.

New cocoa pricing system adds another layer

Financing is not the only issue facing the cocoa sector.

Ghana has also introduced a new pricing framework under which cocoa farmers are guaranteed at least 70% of the gross Free-On-Board (FOB) export value of their cocoa.

The Producer Price Review Committee previously reduced the producer price from GH¢58,000 per tonne to GH¢41,392 per tonne, equivalent to about GH¢2,587 per 64kg bag.

There has since been discussion about a possible increase for the new season, with a figure of around GH¢2,737 per bag reportedly proposed.

The final price will be closely watched by farmers, buyers and investors because it will affect the amount of financing required to purchase the crop.

Concern over cocoa smuggling

Industry players are also watching developments in neighbouring Côte d'Ivoire.

Côte d'Ivoire has set its 2026/27 main-crop producer price at 1,200 CFA francs per kilogramme, significantly lower than the previous season's 2,800 CFA francs.

Ghanaian cocoa industry stakeholders have warned that differences in producer prices between the two countries could create incentives for cocoa to move across borders.

There are concerns that a substantial price gap could increase smuggling into or out of Ghana, depending on the relative prices offered to farmers in the two countries.

Industry representatives have therefore called for stronger measures to monitor Ghana's borders and protect the country's cocoa supply.

A major test for Ghana's new cocoa financing model

The delayed opening of the 2026/27 cocoa season comes at an important point for Ghana's cocoa industry.

With the traditional international funding model under pressure, COCOBOD is attempting to rely more heavily on Ghana's domestic financial market.

The success of the new approach will depend on whether COCOBOD can attract sufficient funding at a cost that is manageable for the sector, while also ensuring that LBCs have the resources needed to purchase cocoa from farmers.

For now, investors' demand for higher returns, the outstanding GH¢4 billion owed to cocoa buyers and uncertainty over the final producer price remain key issues as Ghana prepares for the new season.