- Critical loan acquisition
- Unprecedented shortfall
- Challenges amid traditions
Ghana’s cocoa regulatory body, COCOBOD, is set to secure a loan of up to $1.5 billion by September to fund cocoa purchases for the 2024/25 season, aiming to offset the impact of low output.
According to two sources within COCOBOD familiar with the arrangement, the loan is essential due to the significant shortfall in cocoa production this season.
Traditionally, Ghana relies on an annual syndicated loan to finance cocoa purchases from farmers, typically finalized at the beginning of the season in September.
However, delays in securing this year’s $800 million loan were experienced due to the lower-than-expected cocoa output.
Consequently, COCOBOD has withdrawn $600 million from the initial loan and canceled the rest, as the current season’s cocoa output is anticipated to fall nearly 40% short of forecasts, rendering it unable to fulfill the entire loan obligation.
According to one COCOBOD source, a request for proposals has been sent to banks indicating the intention to borrow up to $1.5 billion for the upcoming season. Discussions are underway between COCOBOD and the banks to determine the optimal loan amount.
Despite the challenges, there is confidence within COCOBOD that the syndication will proceed as planned. International banks have shown interest, with some already inspecting cocoa farms and others scheduled to visit in the coming months.
Production is projected to rebound to 810,000 metric tons in the next season, as per the sources. However, they requested anonymity as they are not authorized to speak to the media.
COCOBOD declined to comment on the matter.
Ghana’s cocoa sector has faced various challenges including adverse weather conditions, diseases, and smuggling, resulting in a significant shortfall in the 2023/24 season. COCOBOD estimates losses of around 150,000 tons due to smuggling and illegal activities in the previous season.
Moreover, the spread of the swollen shoot virus has devastated approximately 590,000 hectares of farmland between 2018 and 2024.
Despite the setbacks, there is optimism that Ghana will meet its target of 810,000 tons next season, driven by anticipated improvements in weather conditions and the rehabilitation of cocoa farms.
Recent data from the central bank shows a nearly 50% decline in Ghana’s cocoa export revenue in the first four months of the year.
