Indigenous Cocoa Buyers at Risk of Extinction, COCOBOD Boss Cautions

The Acting Chief Executive Officer of the Ghana Cocoa Board (COCOBOD), Dr. Randy Abbey, has raised serious concerns about the survival of Ghana’s indigenous Licensed Buying Companies (LBCs), warning that without immediate financial intervention, many may be forced out of business.

Speaking on PM Express Business Edition on Joy News, Dr. Abbey explained that the current cocoa financing structure has become unsustainable for local LBCs, especially in the absence of the annual syndicated loan that has traditionally supported the sector.

“Something is happening with the LBCs, especially the indigenous ones. And it’s because we’re not going for the syndicated loan,” he said.

For decades, COCOBOD has relied on syndicated loans secured from international banks to finance cocoa purchases. These funds are typically used to establish a “seed fund,” which is disbursed to LBCs to buy cocoa beans from farmers. This approach has ensured liquidity for cocoa transactions across the country, especially for smaller, Ghanaian-owned buying companies that do not have significant capital reserves.

However, for the 2024/2025 cocoa season, COCOBOD opted not to pursue the syndicated loan, citing high borrowing costs. The move has left local cocoa buyers stranded, unable to access the capital needed to purchase cocoa from farmers.

“There’s no seed fund this year,” Dr. Abbey stated. “That means indigenous LBCs can’t operate—they simply don’t have the money to buy cocoa.”

He acknowledged that bypassing the syndicated loan could result in savings on interest payments for COCOBOD, but stressed that the decision is creating a crisis for local operators who depend on that funding.

“Given current cocoa prices, a syndicated loan could cost COCOBOD as much as GH¢3 billion to GH¢3.5 billion. And banks are now asking for interest rates between 8% and 10% on the dollar,” he revealed.

In response to the growing pressure on LBCs, Dr. Abbey said COCOBOD has reached out to the Bank of Ghana for support. One of the proposals he has put forward is to tap into the Cash Reserve Ratio (CRR) that commercial banks are mandated to keep with the central bank.

Under current regulations, banks in Ghana are required to hold 25% of their deposits with the Bank of Ghana as reserves. Dr. Abbey is suggesting that a portion of this—between 2% and 3%—be allocated as a special fund to support indigenous cocoa buyers.

“These reserves are just sitting there,” he argued. “Meanwhile, we have a critical industry that’s on the verge of collapse. Why not use a small portion of that idle capital to support local LBCs?”

To ensure accountability and proper use of the funds, he proposed that the money be ring-fenced and restricted to cocoa-related activities only.

“We can set strict parameters around it—make sure it’s used solely for cocoa purchases,” he said. “We don’t want it diverted into other sectors like oil or consumer goods.”

While discussions with the central bank are ongoing, Dr. Abbey expressed cautious optimism. He confirmed that COCOBOD has followed up with formal communication and is awaiting a response.

However, he warned that time is of the essence.

“If we continue down this path without a clear financing solution, I’m afraid many of our indigenous cocoa buyers may simply disappear,” he cautioned.

The collapse of local LBCs would have wider implications beyond the businesses themselves. These companies play a vital role in cocoa sourcing, employment, and rural economic development. Their absence could leave smallholder farmers vulnerable, reduce competition, and consolidate control of the cocoa market in the hands of larger multinational firms.

As Ghana’s cocoa sector navigates increasing global price volatility and rising financing costs, stakeholders will be watching closely to see whether the government and central bank act swiftly to prevent a looming collapse in one of the country’s most important industries.