The Ghana Cocoa Board (COCOBOD) is set to launch the 2024/2025 cocoa season with a new self-financing model, which aims to eliminate reliance on traditional syndicated loans.
CEO Joseph Boahen Aidoo emphasized that while the board will initiate this self-financing approach, it will still maintain the option to utilize syndicated loans if necessary.
During a recent meeting with cocoa farmers in Kumasi, Aidoo stated, “It is just a blend. We are blending what we’ve been doing for years. I don’t think there is anything wrong with introducing a new thing.” He explained that the self-financing model had been trialed successfully from June to August during the last crop season, and the board intends to scale this approach for the upcoming season.
Aidoo highlighted that the shift from a 32-year-old syndicated loan system to a self-financing model is not merely a financial maneuver but a strategic decision to enhance the cocoa sector’s sustainability.
He noted, “We used the syndication module to buy and ship cocoa where the monies were paid to the bank accounts of the lenders but this time we want the monies to be paid to us directly.” This change, he believes, will alleviate pressure on the local currency by ensuring a consistent inflow of dollars directly from overseas buyers.
This announcement has been met with skepticism from Finance Minister Dr. Mohammed Amin Adam, who has reiterated that the government will still seek external funding to support the cocoa sector. He stated, “I want to take this opportunity to clarify that as part of measures to improve the financial viability of COCOBOD, the government for the 2024/2025 crop season will be sourcing funds through the syndication process and other alternative sources.”
This contradiction raises questions about the financial strategy for the cocoa industry, which has been facing numerous challenges, including rising costs and environmental issues.
However, Aidoo has assured farmers that the pricing regime would be designed to enhance their incomes and livelihoods, stating, “We want to implement the not borrowing, thus the self-financing. That is what we are starting the season with, and once it works, there will be no need for us to go for borrowing.”
As the new cocoa season approaches, officially opening on September 10, 2024, President Akufo-Addo is expected to announce new pricing, with speculation of a nearly 45% increase to address the farmers’ concerns about profitability amid increasing production costs.
