Ghana will implement a new cocoa funding model during the 2026/2027 crop season. This new approach will overhaul how the country finances its annual cocoa purchases. It targets price stability for farmers and sustainable income streams for the sector.
The current system has relied on syndicated loans for over 30 years. These loans used forward cocoa sales to secure financing. However, the old model required 70% to 92% of Ghana's cocoa crop to be pledged as collateral to foreign financiers. This dependency created an urgent need for policy change.
This shift aligns with Ghana's broader economic strategy to reduce external vulnerabilities and boost domestic financial markets. It also seeks to empower local institutions and investors. Ghana has often faced currency fluctuations and external debt pressures, making this move strategically important.
Dr. Ransford Abbey, Chief Executive of the Ghana Cocoa Board (COCOBOD), provided key insights into the new model. He stated that the new funding model will have a new pricing mechanism. This mechanism will involve periodic reviews, possibly quarterly, and will apply to the entire crop. Dr. Abbey made these remarks at the Africa Cocoa Finance & Investment Forum (ACFIF 2026) in London.
The updated model focuses on raising capital through instruments like commercial paper and commercial notes. It plans to tap into domestic liquidity, including funds from institutional investors. A detailed prospectus outlining opportunities for financial institutions and investors is currently being finalized. COCOBOD will explain these details to stakeholders before the 2026/2027 crop season begins. This ensures transparency and broad participation.
The reform will maintain the policy of paying cocoa farmers 70 percent of the Free-On-Board (FOB) price. Additionally, it will introduce regular price reviews. These reviews will promptly adjust to changes in global cocoa prices and exchange rates. The goal is to balance stable farmer incomes with the sector's financial health. Dr. Abbey expressed confidence in Ghana's financial sector to support this transition. He cited improving macroeconomic conditions and growing investor interest in structured financial instruments as key factors.
This move is expected to better protect Ghanaian cocoa farmers from worldwide price volatility. By moving away from heavy reliance on offshore financing, Ghana aims to retain more value within its economy. It also strengthens its financial independence. Decision-makers and markets will closely watch the implementation and initial effects on cocoa prices and farmer livelihoods. Addressing concerns from Licensed Buying Companies and investors regarding the structure and scale of the new financing arrangements will be crucial.