The somewhat sweeping reforms introduced in the cocoa sector, including the reduction in the declared producer price at the commencement of the 2025/2026 cocoa season, have triggered predictable anxiety among cocoa farmers. Financial strain within an industry unsettles more than balance sheets. It disturbs settled expectations. It questions policy choices and, as well, reopens long-standing arrangements.
When pressure mounts, every link in the value chain comes under scrutiny. The cocoa sector has not been spared. Among the questions now surfacing is this: who benefits from the current architecture of Ghana’s export economy?
The Chief Executive Officer of OheneCocoa and spokesperson for the National Cocoa Farmers’ Association, Nana Aduna II, has called has called for a review of the “free zone concept,” describing it as “completely anti-competitive” and destructive of the local industry.
What is a Free Zone?
Under the Free Zones Act, 1995 (Act 504), a free zone is a legally demarcated space, or in some instances a licensed enterprise, authorised to produce goods and services primarily for export under a special regulatory regime. The framework is supervised by the Ghana Free Zones Authority.
Free zone enterprises may operate within designated enclaves such as the Tema Export Processing Zone, Ashanti Technology Park, Sekondi Export Processing Zone and Shama Export Processing Zone. The Act also permits what are known as single-factory zones, individual enterprises declared by publication to operate within the same preferential framework, even outside a larger enclave.
The intention behind the law is to promote export-oriented production by reducing certain domestic tax and customs burdens for qualifying enterprises, thereby making Ghana more attractive to investors targeting foreign markets.
Who Qualifies and How Does One Enter the Regime?
The free zone framework is not automatic. It is licensed. A person may apply to establish an enterprise within a free zone. But no person may lawfully carry on a trade, business, or industry within a free zone unless two basic conditions are met.
First, the enterprise must be properly registered under Ghanaian law, either under the Companies Act, 2019 (Act 992) or the Incorporated Private Partnership Act, 1962 (Act 152). In other words, there must be a legally recognised business entity.
Second, the entity must obtain a licence under the Free Zones Act, 1995 (Act 504) authorising it to operate within the free zone regime. Without that licence, the privileges of the regime do not attach.
The application for a free zone licence is made to the Secretariat of the Ghana Free Zones Authority. Upon submission, the Authority is required to communicate its decision within twenty-eight days. It is this licensing step that formally transforms an ordinary registered company into a “free zone enterprise.”
Once licensed, the scope of permitted activities is broad. A free zone enterprise may store, warehouse, pack and unpack, assemble, process, manufacture, refine, label, or otherwise handle goods for export or re-export. The regime is designed to allow flexibility in handling foreign or domestic raw materials intended for foreign markets.
The law therefore does not merely create a geographic enclave. It creates a regulated status, one that must be applied for, granted, and maintained.
The Incentive Structure: What Comes With the Status?
The free zone framework under the Free Zones Act, 1995 (Act 504) is built around substantial fiscal and regulatory concessions.
A licensed free zone enterprise enjoys a corporate income tax holiday for the first ten years of operation. After that period, it is subject to a reduced corporate tax rate of 15 percent. In contrast, companies operating outside the regime remain subject to the standard corporate tax structure.
Imports into a free zone are exempt from direct and indirect taxes and duties. Shareholders are exempt from withholding tax on dividends arising from free zone investments. The regime also guarantees the unconditional transfer of dividends, loan servicing payments, and proceeds from liquidation in convertible currency.
Beyond tax treatment, free zone enterprises are permitted significant autonomy in foreign currency operations, including the maintenance of foreign currency accounts in Ghana. They are protected against nationalisation except under strictly defined constitutional safeguards, including fair and adequate compensation.
In the event of disputes with Government, the enterprise may opt for national or international arbitration mechanisms and, where disagreement arises over the method of dispute resolution, the choice of the licensee prevails.
There is also a limited domestic window. Up to 30 percent of annual production may be sold into the national customs territory, though such sales are treated as imports and made subject to applicable duties.
Taken together, the incentives are deliberately structured to create a preferential environment designed to attract export-oriented capital. It is precisely this preferential environment that now finds itself under renewed scrutiny.
A Law of 1995 in a Cocoa Sector of 2026?
The cocoa industry operates under the supervision of the Ghana Cocoa Board, which regulates pricing, marketing and export structures. At the same time, the free zone regime under Act 504 is legally robust, export-oriented and investment-protective one. It was designed to signal seriousness to international capital.
Nearly three decades later, the global trading environment has evolved. So too have the internal pressures within key sectors of the Ghanaian economy. The cocoa industry, long treated as a strategic national commodity, now operates within a more complex financial and regulatory landscape.
To question the free zone concept today is not necessarily to call for its repeal. It may instead be a call for reflection. Reform, if it comes, need not dismantle the regime. It may mean recalibration. It may mean asking whether certain strategic commodities, such as cocoa, require tailored treatment within a broader export incentive framework.
Perhaps it is asking too much of a silently assumed, effective regime. Yet, can we truly leave it untouched? Can we not trace the core roots of the problem and face it head on? Whichever perspective one adopts, one truth emerges clearly, that there is a policy and legislative question on the table. As a law-created regime, the free zone framework can and should be refined through law.
