COCOBOD moves to local financing model, phases out offshore Cocoa Loans
The Ghana Cocoa Board (COCOBOD) is finalising a major financing reform that will see cocoa purchases funded entirely through domestic sources, marking a significant departure from its long-standing reliance on offshore syndicated loans.
Under the new arrangement, COCOBOD plans to replace external borrowing with a domestic commercial paper programme backed by local investors, including pension funds, commercial banks, and key stakeholders within the cocoa value chain.
Speaking on the sidelines of the Ghana-UK Investment Summit in London, COCOBOD’s Deputy Chief Executive Officer in charge of Finance and Administration, Ato Boateng, disclosed that the Board has made substantial progress towards implementing the new funding model ahead of the next crop season.
“We’ve made significant progress and have hired all the advisers we need to launch the issuance,” he said, adding that work on the financing structure is nearing completion while regulatory concerns are being addressed.
A key component of the strategy is the mobilisation of funds from Ghana’s pension industry, which manages assets estimated at about GH¢100 billion.
According to Mr. Boateng, the Board sees significant opportunities in leveraging domestic liquidity to support cocoa purchases.
“The whole idea is for COCOBOD to raise funds internally, and we are looking at three different sources. The first source is pension funds,” he explained.
Commercial banks will serve as the second pillar of the financing framework. To enhance their participation, COCOBOD intends to work with development finance institutions to expand lending capacity and reduce risk exposure.
“We need to be very innovative because we also want banks to actively participate. As such, we will look at bringing in development finance institutions to expand the lending capacity of the banks,” he stated.
The third source of funding will involve private placements targeted at industry players, including international cocoa buyers and local operators within the cocoa value chain.
To align financing with the cocoa production cycle, COCOBOD is proposing a 270-day commercial paper instrument, equivalent to a nine-month maturity period.
Mr. Boateng explained that the facility is designed to provide working capital during the peak purchasing season, when the Board acquires the bulk of the country’s cocoa output.
“What we are proposing is a 270-day commercial paper, meaning a nine-month maturity. It is essentially a working capital facility because our season runs from September through January, which is when we purchase about 70 per cent of our produce,” he said.
The Board also plans to adopt a phased funding approach, drawing funds only when needed rather than borrowing large sums upfront.
“The idea is to structure the funding in tranches so that we draw only what we need for purchases. When the funds are no longer needed, we repay investors to ensure the money is used strictly for its intended purpose,” Mr. Boateng explained.
He stressed that the programme is being developed in consultation with financial advisers and regulators to ensure a smooth rollout and sustainable implementation.
The transition forms part of broader efforts to strengthen COCOBOD’s financial position, reduce exposure to foreign exchange risks, and ensure timely payments to Licensed Buying Companies (LBCs) and cocoa farmers.
By moving to a cedi-denominated financing structure, COCOBOD aims to reduce the costs associated with external borrowing while promoting greater financial self-reliance in Ghana’s cocoa sector.
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