The Ghana Cocoa Board (COCOBOD) is set to introduce a new financing framework for the cocoa sector beginning the 2026/2027 crop season, as part of wide-ranging reforms aimed at ensuring price stability and improving farmer incomes.
Chief Executive of COCOBOD, Dr. Ransford Abbey, disclosed that modalities for the new funding model are nearing completion, describing the initiative as a significant departure from Ghana’s long-standing cocoa financing structure.
He made the announcement during a high-level panel session on Pre-Export Liquidity & Long-Term Capital at the 2026 Africa Cocoa Finance & Investment Forum (ACFIF), held at the London Stock Exchange.
Shift from syndicated loan dependence
For more than three decades, Ghana’s cocoa sector has relied on syndicated loans backed by forward cocoa sales to finance annual purchases. While this arrangement ensured access to vital liquidity, Dr. Abbey noted that it came at a high cost.
According to him, between 70 and 92 percent of Ghana’s cocoa crop is typically committed as collateral to offshore financiers under the existing system.
“This underscores the urgent need for a paradigm shift in policy,” he said.
The new approach, he explained, is designed to reduce reliance on external borrowing while strengthening domestic financial participation in the sector.
A key feature of the proposed model is the introduction of a more flexible pricing system. Under the new framework, cocoa prices are expected to be reviewed periodically—potentially on a quarterly basis—rather than being fixed for an entire crop season.
“The new funding model will come with a new pricing mechanism which will involve periodic reviews, maybe quarterly, and will be used for the entire crop,” Dr. Abbey said.
The initiative is intended to better align producer prices with movements in global cocoa markets and currency fluctuations, while offering greater predictability and sustainability for farmers.
Dr. Abbey indicated that the revised model will leverage financial instruments such as commercial paper and commercial notes to mobilise capital locally. Institutional investors within Ghana are expected to play a more significant role in financing cocoa purchases.
The strategy aims not only to deepen Ghana’s domestic capital markets but also to reduce exposure to external financing risks.
“The model focuses on tapping into domestic liquidity while creating innovative instruments that attract investor participation,” he noted.
Despite the changes, COCOBOD will maintain its longstanding policy of paying farmers at least 70 percent of the Free-On-Board (FOB) price.
The periodic pricing mechanism, however, will allow for adjustments in response to market conditions, helping to cushion farmers against volatility in global cocoa prices.
The overarching objective, according to Dr. Abbey, is to strike a balance between ensuring stable incomes for producers and maintaining the financial sustainability of the sector.
The new funding framework is also expected to broaden access to financing for local processors and indigenous companies within the cocoa value chain.
By expanding participation, COCOBOD hopes to promote greater value retention within Ghana and stimulate growth in domestic processing capacity.
“This reform will create more inclusive opportunities across the cocoa economy,” Dr. Abbey said.
Dr. Abbey acknowledged the need for clarity among key stakeholders, particularly Licensed Buying Companies (LBCs) and the investor community, regarding the structure and scale of the new funding arrangement.
He revealed that a detailed prospectus is currently being finalised and will outline participation opportunities for financial institutions and investors.
The document is expected to be presented to stakeholders ahead of the opening of the 2026/2027 crop season.
Dr. Abbey expressed optimism that the reforms will better protect Ghanaian cocoa farmers from global price volatility while positioning the industry on a more sustainable financial footing.
He also cited improving macroeconomic conditions and growing investor interest in structured financial instruments as factors that will support the transition.
The ACFIF 2026 brought together policymakers, investors, and industry stakeholders to discuss financing reforms and investment opportunities within Africa’s cocoa sector.
The forum was convened by Cocoa Trade and Invest Africa in partnership with the International Cocoa Organization (ICCO) and the United Kingdom office of the Cocoa Marketing Company (CMC UK).
Participants focused on strategies to unlock capital, enhance sustainability, and strengthen resilience across the cocoa value chain in Africa.
By: Christian Akorlie / businesspostonline
