Despite Ghana being a major player in the global multi-billion-dollar cocoa industry, its cocoa processing sector is ironically in tatters and continues to struggle for profitability.
Ghana is the world’s second-largest producer of cocoa, yet it continues to mainly export raw cocoa beans with little value addition, which has the potential to earn the country more revenue.
A new brief by IMANI Africa has reignited debate over why a country that produces one of the finest cocoa beans in the world cannot make enough profit from processing it. The policy think tank identifies four major reasons behind this puzzle.
The issues, IMANI Africa says, range from poor access to raw materials to high operating costs and financial constraints.
Limited Access to Cocoa Beans
Ironically, Ghana’s cocoa processors face shortages of the very beans grown in their backyard. Most of the country’s cocoa is sold in advance on international contracts, leaving only a small share for local processors.
According to IMANI, companies like the Cocoa Processing Company (CPC) often struggle to secure light beans suitable for processing. In some cases, they are forced to import beans from neighboring countries, which is a costly move that defeats the purpose of local value addition.
“Ghana sells the bulk of its cocoa forward on international contracts, leaving processors with limited access to quality beans. As a result, some processors have had to import beans from neighboring countries to sustain production, a costly and inefficient alternative,” parts of the brief cited by The High Street Journal indicated.
High Operational Costs, Low Margins
Cocoa processing in Ghana is not just about turning beans into chocolate or butter. IMANI observes that it’s a battle against high operational costs. Energy tariffs, taxes, and import duties on inputs such as sugar and milk make the business uncompetitive.
Unlike their counterparts in Asia or Europe, Ghanaian processors pay more for power and financing, making it nearly impossible to price products competitively in export markets.
IMANI says, “For many firms, the cost of production outweighs revenue, leaving them to operate at break-even or losses.”
Limited Value Addition
Another major weakness, the think tank identifies, lies in how much value Ghana adds to its cocoa. Most processors focus on producing semi-finished goods like cocoa liquor and butter. These are mainly ingredients used by global confectionery giants abroad to make chocolates and other products.
That means the real profits in the value chain, from branding, marketing, and retail, are earned outside Ghana. The local industry remains stuck at the lower end of the value ladder, unable to capture the returns from finished consumer goods.
Financial Constraints Choking Growth
Access to finance, as it exists in the economy, also remains a persistent barrier in the cocoa processing sector.
Cocoa processors in Ghana have limited access to affordable credit, making it difficult to expand production or modernize operations. The absence of syndicated loans and flexible financing forces companies to rely heavily on self-financing, which drains liquidity and slows growth.
This lack of financial muscle has made local processing a survival game rather than a growth story.
The Bottomline
IMANI’s brief paints the worrying picture of an industry caught in a contradiction. The sector is rich in potential but poor in performance. It calls for reforms to ensure that cocoa processing becomes not just a patriotic effort, but a profitable one.
The think tank believes that the future lies in mastering the value chain, from farm to finished product, so that the country earns more than just applause for growing the beans that sweeten the world.
But until then, the country has to be deliberate in fixing the bottlenecks that make the sector currently unprofitable.
