11% debt will mature in June 2027 as cash-strapped cocoa sector turns to domestic financing…..
Ghana’s cocoa regulator has raised 3.39 billion cedis, equivalent to about $288.02 million, through a short-term domestic debt issuance to finance cocoa purchases from farmers as the new crop season gets underway.
The amount raised by the Ghana Cocoa Board, COCOBOD, however, fell short of its 4 billion-cedi target by about $51.83 million, highlighting the funding pressures facing the country’s cocoa sector.
The debt was issued on Monday, October 5, at an interest rate of 11 per cent and is scheduled to mature in June 2027, according to debt auction results released by Cocoa Capital, the special purpose vehicle handling the transaction.
The funds are expected to provide liquidity for licensed cocoa buying companies to purchase cocoa beans from farmers during the 2026/2027 season, which officially opened on September 25.
The financing comes against the backdrop of concerns among licensed buyers over their ability to fund purchases with their own money. Some buyers had reportedly been reluctant to commit fresh capital amid concerns that reimbursement could take several months, potentially disrupting purchases and payments to farmers.
The latest borrowing is the first of three planned debt issuances under COCOBOD’s 16.3 billion-cedi, or $1.38 billion, domestic financing programme. The remaining tranches are expected to be issued before the end of the current crop season.
The move represents a significant shift in Ghana’s approach to financing cocoa purchases following difficulties with its traditional funding arrangements.
COCOBOD’s longstanding syndicated borrowing arrangement with international banks collapsed during the 2023/2024 cocoa season, while a subsequent financing model backed by international cocoa traders also failed to provide a lasting solution.
The funding difficulties contributed to delays in payments to farmers during the previous season and left the regulator searching for alternative sources of liquidity.
Ghana had been considering a $1 billion domestic bond to support cocoa purchases during the 2026/2027 season, as the country increasingly turns to its domestic market after years of depending heavily on international financing.
The financial strain has also extended to licensed cocoa purchasing companies, which have reportedly accumulated about $750 million in bank debt.
The latest debt programme is therefore part of a broader effort by Ghana to establish a more dependable funding structure for cocoa procurement and reduce the impact of disruptions in external financing.
The development also comes as Nigeria’s cocoa industry increasingly taps debt and development financing to support procurement and processing.
Nigerian agribusiness Johnvents Industries Limited is preparing to raise up to N80 billion through commercial paper to strengthen working capital and finance large-scale cocoa purchases during the main harvest season. The planned issuance is part of the company’s N250 billion commercial paper programme.
Separately, the Bank of Industry announced an €85 million long-term financing facility in July to support the expansion of Nigeria’s cocoa processing industry.
The facility is aimed at helping manufacturers increase domestic processing and value addition, reducing reliance on the export of raw cocoa beans.
While Ghana remains the world’s second-largest cocoa producer, the latest funding exercise underscores the financial challenges confronting cocoa procurement and the growing importance of reliable domestic financing to keep farmers and licensed buyers active throughout the season.
