Ghana overhauls cocoa financing with new domestic bond model
By Nii Trebi Hammond
Ghana is preparing to replace its long-standing syndicated loan structure for cocoa financing with a domestic bond programme, marking a significant shift in how the country funds purchases of its most strategic export.
Finance Minister Dr. Cassiel Ato Forson announced on Thursday that government will introduce a cocoa bond financing model beginning in the 2026/2027 crop season, following mounting liquidity challenges at the Ghana Cocoa Board (COCOBOD).
The move follows years of reliance on annual syndicated loans arranged with international banks to pre-finance cocoa purchases.
Why the financing model is changing
Under the syndicated loan system, COCOBOD secured pre-export financing each season using forward cocoa sales contracts as collateral. Proceeds from cocoa exports were then used to repay the facility.
However, recent pressures — including production shortfalls, debt accumulation and delayed syndicated loan arrangements — have strained the model.
The Finance Minister disclosed that in the 2023/2024 crop season, COCOBOD projected output of 800,000 tonnes but achieved 432,145 tonnes, resulting in significant rollover contracts. He said this weakened revenue flows and contributed to financial stress within the institution.
COCOBOD also required a US$70 million bridge facility from the Ministry of Finance in 2024 to avert default on part of its obligations, according to the Minister.
Meanwhile, global cocoa prices have fallen sharply from previous highs, declining from around US$7,200 per tonne at the start of the 2025/2026 season to roughly US$4,100 per tonne, further tightening margins.
The proposed cocoa bond model
Under the new framework, government plans to raise funds domestically through cocoa bonds to finance purchases within each crop year.
Dr. Forson said the bond programme will create a revolving fund that COCOBOD can turn at least once during the season, reducing reliance on external syndicated facilities and buyer pre-financing arrangements.
The reform is intended to restore liquidity, strengthen operational flexibility and support government’s broader policy of increasing domestic cocoa processing.
Beginning in the 2026/2027 season, government has announced plans to ensure that at least 50% of Ghana’s cocoa beans are processed locally.
Implications for markets
The shift to a domestic bond structure could have implications for Ghana’s capital markets and public debt profile.
By mobilising funds locally, COCOBOD may reduce exposure to external trade finance volatility. However, the success of the model will depend on investor appetite, pricing structure and production performance.
The financing reform comes alongside a broader balance sheet restructuring. Government has announced plans to convert approximately GH¢5.8 billion in COCOBOD legacy debt to the books of the Ministry of Finance and the Bank of Ghana, subject to parliamentary approval.
In addition, GH¢4.35 billion in cocoa road liabilities will be transferred to the central government.
Officials say the debt restructuring is designed to restore positive equity and rebuild confidence in COCOBOD’s operations before the new financing model is rolled out.
A structural reset for a key export sector
Cocoa remains one of Ghana’s largest foreign exchange earners and a major source of rural income. Recent volatility in output and global prices has exposed structural weaknesses in the sector’s financing framework.
The transition from syndicated loans to a domestic bond programme represents a significant re-engineering of the financial backbone of Ghana’s cocoa trade.
Whether the new model delivers greater resilience will depend on execution, market confidence and sustained production recovery in the seasons ahead.
