Accra, Ghana – Ghana Cocoa Board (COCOBOD) announced plans for a new cocoa sector funding model, set to be implemented for the 2026/2027 crop season. Chief Executive Dr. Ransford Abbey revealed the shift during the Africa Cocoa Finance & Investment Forum (ACFIF 2026) at the London Stock Exchange, emphasizing its aim to ensure price stability and sustainable income for cocoa farmers.
Shifting Away from Traditional Syndicated Loans
For over three decades, Ghana’s cocoa sector has financed its annual crop purchases through syndicated loans. These loans are secured against forward cocoa sales, a model that has provided liquidity but required a significant portion of the crop, between 70% and 92%, to be collateralized with offshore financiers. Dr. Abbey highlighted this long-standing practice as the impetus for a necessary paradigm shift in policy.
The existing model’s heavy reliance on collateralization has underscored the urgent need for alternative financing strategies that better serve the interests of Ghanaian farmers and the national economy.
Introducing a New Pricing and Financing Mechanism
The forthcoming funding model introduces a novel pricing mechanism featuring periodic reviews, potentially quarterly. This dynamic pricing will be applied to the entire crop, aiming to better reflect market fluctuations.
COCOBOD plans to mobilize capital through instruments such as commercial paper and commercial notes. A key focus is on tapping into domestic liquidity, including investments from institutional investors within Ghana.
The reform intends to maintain the policy of paying farmers 70 percent of the Free-On-Board (FOB) price. However, the introduction of periodic price reviews will allow for adjustments in response to global cocoa price and exchange rate movements.
The objective is to achieve a delicate balance between providing stable incomes for farmers and ensuring the financial sustainability of the entire cocoa sector.
Broadening Local Participation and Value Retention
Beyond farmer income, the new model is designed to foster greater inclusivity within the cocoa economy. It aims to enhance financing access for local processors and indigenous Ghanaian companies.
This initiative is expected to strengthen value retention within the country, moving beyond raw cocoa exports towards more diversified and value-added activities.
Confidence in Ghana’s Financial Ecosystem
Dr. Abbey expressed strong confidence in Ghana’s financial ecosystem’s capacity to support this transition. He pointed to improving macroeconomic conditions and a growing investor appetite for structured financial instruments as positive indicators.
However, he acknowledged the critical need for clear communication and understanding among all stakeholders. This includes Licensed Buying Companies (LBCs) and the investor community, regarding the structure and scale of funding under the new model.
A detailed prospectus is currently being finalized. This document will outline specific participation opportunities for financial institutions and investors. COCOBOD plans to thoroughly explain its contents to key stakeholders before the commencement of the 2026/2027 crop season.
Looking Ahead
COCOBOD anticipates that this new funding model will significantly enhance the protection of Ghanaian cocoa farmers’ incomes against the volatility of global cocoa prices in the coming years. The Africa Cocoa Finance & Investment Forum (ACFIF 2026), convened by Cocoa Trade and Invest Africa in partnership with the International Cocoa Organization (ICCO) and CMC UK, served as a platform to advance these crucial sector reforms and attract vital investment.
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