Ghana turns to local lenders for $1.4 billion cocoa rescue plan

Ghana Cocoa Board is seeking to raise GH₵16.3 billion ($1.4 billion) from domestic investors to finance cocoa purchases for the upcoming season, according to a government presentation to investors. The regulator is turning to local debt markets after its decade-old syndicated loan arrangement with international banks collapsed during the 2023-24 season.

Domestic debt replaces loans

A separate arrangement in which international trading houses pre-financed cocoa purchases also fell through last season, contributing to delays in payments to farmers. Cocoa Capital PLC, a newly established special-purpose vehicle, is expected to issue its first debt tranche this week, comprising a GH₵2.3 billion bond and GH₵4 billion in commercial paper.

The commercial paper, with maturities of up to 270 days, will finance seasonal cocoa purchases, while bonds with maturities of up to five years will refinance COCOBOD’s existing short-term debt, according to the presentation made last Thursday. The structure shifts more of the cocoa sector’s funding needs toward Ghana’s domestic capital market.

Buyers await billions

Ghana’s cocoa buyers said last week they were owed about GH₵4 billion ($345.3 million) by COCOBOD for last season’s crop and want the outstanding payments settled before the new crop year begins. The Chamber of Cocoa Marketers, which represents licensed cocoa buyers, has also warned that financing may not yet be secured for purchases when the season opens.

The funding squeeze has added uncertainty around the start of the new cocoa season, with farmers and buyers watching the regulator’s ability to finance purchases and settle outstanding obligations. COCOBOD’s move into the domestic debt market comes as it seeks an alternative to financing arrangements that previously relied on international banks and trading houses.

Investors targeted

Eligible investors include commercial banks, pension funds, insurance companies, stockbrokers, high-net-worth individuals, other institutional investors and international cocoa buyers. COCOBOD did not respond to a request for comment on the planned issuance, while Cocoa Capital is expected to lead the initial fundraising through the domestic market.

COCOBOD said on X last week that the government had engaged investors over the planned issuance, describing the move as a shift toward mobilizing Ghana’s domestic capital market to finance the cocoa sector. The broader GH₵16.3 billion program is intended to provide funding for cocoa purchases while addressing existing short-term obligations.