According to two sources with knowledge of the arrangement, Ghana’s cocoa regulator, COCOBOD, will borrow up to $1.5 billion by September to finance cocoa purchases for the 2024/25 season. This is a significant increase from the $800 million syndicated loan that COCOBOD secured for the current 2023/24 season.
The world’s second-largest cocoa producer after Ivory Coast, Ghana typically uses an annual syndicated loan to finance bean purchases from farmers at the start of the season in September. However, this year’s $800 million loan faced delays due to low cocoa output so far this season, leading COCOBOD to withdraw only $600 million and cancel the remainder.
The sources said that COCOBOD has sent a request for proposal to banks, indicating it will borrow up to $1.5 billion for the next season. This increased borrowing is understood to be in response to the expected nearly 40% shortfall in cocoa output for the current 2023/24 season.
One COCOBOD source expressed confidence that the syndication would go through, with at least one international bank already visiting Ghana to inspect cocoa farms before deciding on the offer, while another is scheduled to visit next month.
Production is expected to recover to 810,000 metric tons next season, the sources said, though they noted that Ghana’s cocoa sector has been affected by adverse weather, disease, and illegal cocoa smuggling and gold mining.
The increased borrowing highlights the challenges facing Ghana’s cocoa industry, which has seen its export revenue fall nearly 50% year-on-year in the first four months of 2023. The additional financing aims to help COCOBOD compensate for the low output and ensure adequate funding for the 2024/25 cocoa purchases.