Ghana's Cocoa Board Turns to Domestic Markets for $1.4 Billion

Ghana Cocoa Board (COCOBOD) is seeking to raise 16.3 billion Ghana cedis, equivalent to about $1.4 billion, from domestic investors to finance cocoa purchases for the coming season, according to a government presentation made to investors.

The regulator has turned to local debt markets after its decade-old syndicated loan arrangement with international banks collapsed during the 2023/24 season. A separate mechanism under which international trading houses pre-financed purchases also fell through last season, contributing to delays in payments to farmers. Funding difficulties have left farmers and buyers uncertain about the timing of the new season.

Cocoa Capital PLC, a newly created special purpose vehicle, is expected to issue a first tranche this week, made up of a 2.3 billion cedi bond and 4 billion cedis in commercial paper. Commercial paper with tenors of up to 270 days will finance seasonal cocoa purchases, while bonds maturing in up to five years will refinance COCOBOD's existing short-term debts, the presentation showed.

Debt repayments will be backed by assigned cocoa export receivables from selected forward sales contracts. Eligible participants include commercial banks, pension funds, insurance companies, stockbrokers, high-net-worth individuals, other institutional investors and international cocoa buyers.

Last week, Ghana's cocoa buyers said COCOBOD owed them about 4 billion cedis for last season's crop and pressed for payment before the new crop year begins. The Chamber of Cocoa Marketers, which represents licensed cocoa buyers, also cautioned that financing may not yet be in place to fund purchases once the season opens.

Ghana and Ivory Coast, the world's two largest cocoa producers, agreed in June to harmonise their farmgate prices and season start dates after a meeting between the two countries' presidents. Ivory Coast opened its season on September 1, while Ghana has yet to announce a start date.

COCOBOD did not respond to a request for comment on the new issuance. It said on X last week that the government had engaged investors, describing the planned issuance as a shift towards mobilising Ghana's domestic capital market to finance the cocoa sector.