Ghana’s cocoa exports are showing the long-term deterioration in trade terms associated with dependence on primary commodities, underscoring the challenge of generating sustained economic gains from raw agricultural exports, according to a new Afreximbank study.
The research, which examined 29 major African export commodities using annual data from 1960 to 2024, finds that most commodities exhibit long-term deterioration or stagnation in their terms of trade, with temporary improvements following global shocks generally failing to produce lasting gains.
Cocoa is among the commodities identified in the study as particularly exposed to this pattern. The research specifically cites cocoa degradation as a continuing problem for exporters, including Ghana and Côte d’Ivoire, despite periodic price gains in global markets.
The findings are significant for Ghana because it remains exposed to international cocoa prices while importing manufactured goods whose prices determine how much purchasing power its commodity exports generate.
The study’s central argument is based on the Singer-Prebisch Hypothesis, which holds that countries dependent on primary commodities tend to experience a long-term deterioration in the relative value of their exports compared with manufactured goods. The researchers say their evidence supports the hypothesis for much of Africa’s commodity export basket.
Cocoa gains fail to translate into lasting improvement
The report distinguishes between short-term commodity price gains and lasting improvements in trade terms. Across the commodities studied, structural breaks were frequently followed by periods of stagnation rather than a sustained improvement in trade terms. The researchers describe the predominant pattern as a cycle in which a price shock produces an improvement, followed by stagnation and renewed deterioration.
For cocoa-producing economies, that creates a challenge because periods of stronger cocoa prices can improve export earnings without fundamentally changing the structure of the economy or increasing the value captured from production.
The study says temporary commodity booms, including those associated with stronger global demand, cannot by themselves provide a reliable basis for long-term development. When global conditions change, vulnerabilities return in economies that have not diversified or developed greater domestic value addition.
Raw cocoa leaves value outside Africa
The report argues that African economies need to move beyond the export of raw commodities and develop processing and manufacturing capacity that allows more value to be captured domestically.
For cocoa, this means linking primary production more closely to processing and higher-value exports rather than relying predominantly on the sale of raw materials. The study recommends broader industrial upgrading, stronger infrastructure, improved energy and logistics systems and the development of regional value chains.
The African Continental Free Trade Area (AfCFTA) is identified as one potential platform for this shift. By expanding the regional market and reducing barriers to intra-African trade, AfCFTA could support processing and value chains in agriculture and other commodity-linked sectors.
But the researchers caution that AfCFTA alone will not solve the problem. Limited industrial capacity, infrastructure deficits, energy and logistics constraints and non-tariff barriers could prevent deeper regional integration from translating into structural transformation.
Price volatility adds pressure
The study also notes the broader macroeconomic consequences of commodity dependence. Commodity-price volatility can affect export revenues, foreign-exchange earnings, government budgets, exchange rates, investment and economic growth.
For countries dependent on cocoa and other agricultural exports, the researchers recommend diversification, value addition and measures to manage price volatility, including stabilization funds and hedging strategies.
The report’s conclusion is that cocoa and other raw commodity exports can generate short-term revenue but are insufficient on their own to deliver sustained improvements in Africa’s trading position. Without greater processing, industrial upgrading and diversification, the continent risks remaining exposed to a cycle of commodity-price shocks and deteriorating trade conditions.
