Eric Afful is the Member of Parliament for Amenfi West
Questions over Ghana’s cocoa financing model have intensified after the chair of Parliament’s Economy and Development Committee accused the previous administration of mismanaging an US$800million syndicated loan facility, a lapse he says has weakened the Ghana Cocoa Board’s standing with lenders and contributed to the sector’s current liquidity crunch.
Eric Afful, Member of Parliament for Amenfi West, said that during the 2023/24 crop season the former government secured the annual syndicated facility to pre-finance purchases of cocoa beans for export.
However, he alleged that roughly 333,000 metric tonnes of contracted cocoa were not delivered at the end of the season, while the funds raised could not be clearly accounted for in COCOBOD’s books as working capital for purchases.
According to him, the shortfall has since undermined confidence among international creditors, making it difficult for COCOBOD to secure fresh syndicated financing for the 2024/25 season traditionally the backbone of Ghana’s cocoa purchasing system.
“The institution became unattractive to creditors,” he said. “Without that seed funding, the entire chain from buying companies to farmers comes under pressure.”
For decades, COCOBOD has relied on annual syndicated loans arranged with international banks to finance the purchase of beans from Licensed Buying Companies (LBCs), which in turn buy directly from farmers.
The system allows the board to pay promptly at the farm gate before exporting the crop. But any disruption to that financing cycle quickly feeds through the value chain.
Afful said the absence of funds has strained several LBCs, with some scaling back operations or exiting the market altogether, including the state-linked Produce Buying Company.
That, he noted, has slowed purchases in cocoa-growing areas and deepened hardship for farmers, transporters and seasonal workers. “In many communities, cocoa is the local economy,” he said. “When buying stalls, everything stalls.”
The allegations add a fresh political dimension to what is already a difficult period for the sector.
Ghana, the world’s second-largest cocoa producer, has seen output fall sharply in recent years, with production dropping from close to one million tonnes in the late 2010s to below 400,000 tonnes in 2024, hit by disease, ageing farms, smuggling and financing constraints.
At the same time, price volatility on international markets has complicated revenue planning. After a surge in 2024, cocoa prices have retreated, tightening margins for regulators and exporters and exposing weaknesses in funding arrangements.
Industry analysts say reliable pre-financing remains critical. Without it, LBCs struggle to buy beans promptly, farmers delay sales or resort to informal channels, and export flows become erratic with knock-on effects for foreign exchange earnings and the cedi.
The current administration says it is seeking to stabilise the system.
Afful said the government has begun exploring alternative financing mechanisms with the Bank of Ghana and the Ministry of Finance to replace or supplement the syndicated loan structure, while introducing measures aimed at restoring production.
These include a cocoa rehabilitation programme to replant ageing farms and the reintroduction of free fertiliser distribution through cooperatives.
He added that farmers are now receiving roughly 70 per cent of the world market price for their beans, in line with government policy to improve producer incomes.
The government is also working to deliver outstanding export commitments inherited from the previous season, he said.
Still, the episode highlights the fragility of Ghana’s cocoa financing architecture at a time when the crop remains one of the country’s largest sources of export revenue and rural employment.
Any prolonged disruption risks reducing output further and weakening confidence among both lenders and international buyers.
While the political blame game continues, market participants say restoring credibility with financiers and ensuring predictable payments to farmers will be central to rebuilding the sector.
“Cocoa runs on trust and timing,” one industry official said. “Once payments or deliveries falter, the whole system feels it.”
Understanding Ghana’s stock market and how to invest | BizTech
