Ghana COCOBOD implements zero borrowing model to boost cocoa sector sustainability
GHANA – The Ghana Cocoa Board (COCOBOD) has introduced a zero-borrowing arrangement to finance cocoa purchases for the 2024/2025 crop season, marking a significant shift in the sector’s financial strategy.
This new approach aims to make the cocoa industry more viable and sustainable by eliminating the need for loans from external sources.
Joseph Boahen Aidoo, Chief Executive Officer of COCOBOD, described the zero-borrowing model as a homegrown financing innovation.
Under the new arrangement, international buyers will pay directly into the Cocoa Marketing Company’s account on behalf of COCOBOD, bypassing the traditional practice of securing syndicated loans from foreign lenders. This move is expected to significantly reduce the cost of borrowing for the board.
Aidoo noted that international borrowing had become increasingly expensive, with interest rates exceeding 8 percent in recent years.
He also cited Ghana’s recent debt restructuring as a factor that had negatively impacted COCOBOD’s creditworthiness.
The shift to local financing is seen as a solution to reduce dependency on external loans and to enhance the sector’s financial sustainability.
“The financing arrangement being pursued now is a homegrown model, and so far, so good. We are unburdened with any interest and ancillary costs, which significantly reduces the financial pressure on the industry,” he said.
Ghana’s cocoa production recently hit a 23-year low of 425,000 metric tons, raising concerns about the sector’s ability to self-finance.
However, the direct payment system is expected to accelerate cocoa revenue inflows and help stabilize the Ghanaian cedi.
In a bid to further support the sector, Ghana increased the fixed farmgate price for cocoa by 45 percent, from GH¢33,000 to over GH¢48,000.
Additionally, the country has collaborated with Ivory Coast, the world’s largest cocoa producer, to harmonize farmgate prices.
This collaboration is expected to stabilize cocoa production and ensure that the industry, a major economic contributor, remains robust.
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