The Ghana Cocoa Board (COCOBOD) has decided to forgo its usual cocoa syndicated loan from international lenders, opting instead to source funds from the domestic market to purchase cocoa beans. Typically relying on the syndicated loan to finance cocoa purchases, COCOBOD has faced difficulties securing the required $1.5 billion due to concerns from lenders about low cocoa production volumes and past defaults on short-term cocoa bills. Last year, COCOBOD managed to raise only $600 million in December, far short of its September target.
With no syndicated loan expected this year, COCOBOD’s shift to domestic borrowing is aimed at mitigating these challenges. However, this decision may impact the cedi, as the annual syndicated loan has traditionally been a significant source of foreign currency inflow, helping to stabilize the currency. The cedi has already lost more than 21% of its value this year, and the absence of this inflow could exacerbate the situation.
Ghana’s cocoa production has been severely affected by factors such as disease, climate change, illegal mining, and smuggling to neighbouring countries. As a result, export revenue has dropped by 50%, and domestic processing has suffered due to bean shortages. COCOBOD has invested GH¢943 million to revitalize farms, aiming to boost production to over 800,000 metric tonnes for the 2024/2025 season.
