COCOBOD CEO warns indigenous cocoa buyers face collapse

By Praisebell Rosemond Larbi

The Acting Chief Executive Officer (CEO) of the Ghana Cocoa Board (COCOBOD), Dr. Randy Abbey, has warned that Ghana’s indigenous Licensed Buying Companies (LBCs) are on the brink of collapse due to the absence of the traditional syndicated loan arrangement that has long served as the financial lifeline for local cocoa buyers

Speaking in a recent media interview, Dr. Abbey painted a dire picture of the cocoa sector’s current financial landscape, revealing that COCOBOD will not be accessing a syndicated loan facility for the 2025/2026 cocoa season. The outlook for the 2026/2027 season remains uncertain, compounding anxiety among key stakeholders, especially the indigenous LBCs.

“Something is happening with the LBCs, especially the indigenous ones, which has to do with the fact that we are not doing the syndicated loan, 2024/25, low syndicated loans, so no seed fund. Now the indigenous LBCs are unable to operate because there’s no seed money,” Dr. Abbey explained.

Traditionally, COCOBOD has relied on syndicated loans secured from international financial institutions to pre-finance cocoa purchases each season. These funds, often in the range of $1.3 billion annually are disbursed to LBCs as “seed money” to enable them to purchase cocoa beans from farmers. Without this facility, Dr. Abbey says many local LBCs are now financially stranded and at risk of shutting down.

“We’re still doing the 60-40 with the buyers. So it’s the reason why I went to Europe and North America to meet the buyers and all that,” he said, referencing recent international engagements aimed at seeking alternative support.

While acknowledging that COCOBOD’s decision to forgo a syndicated loan could save the institution significant financing costs, especially in light of the current high interest rates—Dr. Abbey admitted that the move has had devastating effects on indigenous operators.

“Mind you, because of where the prices are today, if we were to go for a syndicated loan, COCOBOD would be looking at maybe GHS3 billion or GHS3.5 billion. And because of the nature of our finances, you even have banks asking for 8 percent to 10 percent on USD1,” he noted.

According to Dr. Abbey, most indigenous LBCs lack the financial muscle to raise capital independently without the COCOBOD-backed seed fund. As a result, they are quickly losing ground to foreign or better-capitalized competitors, threatening their long-term survival.

To address the crisis, Dr. Abbey disclosed that he has initiated discussions with the Bank of Ghana and formally proposed a bold intervention that would allocate a portion of the mandatory Cash Reserve Ratio (CRR) held by banks to support the cocoa sector.

He explained that: “What I then told the central bank when we engaged them was that, look, you have the Cash Reserve Ratio, where all the banks put 25% of their deposits at the central bank. This is idle, not doing anything.

“Now we have a critical industry, the indigenous LBC dying off. Can we look at apportioning 2% or 3% of this Cash Reserve Ratio just to support indigenous LBCs?”

He further proposed that the funds, if approved, should be ring-fenced strictly for cocoa purchases to avoid misuse.

“We can restrict it to cocoa purchases, just to ensure that they also don’t go using it for oil, tin, tomatoes and all those things,” he noted.

Dr. Abbey stressed the urgency of the situation, noting that time is running out to save local players in the cocoa buying space.

“If we continue with this financing model, I fear that most of them might go extinct,” he warned.