Ghana raises $288m in first tranche of debt to fund cocoa farmer purchases

The short-term debt was issued on Monday at an interest rate of 11% and will mature in June 2027, according to results of the debt auction shared by Cocoa Capital, the special purpose vehicle through which the debt was issued. The target for the issue was 4 billion cedis ($339.85m).

The funds are expected to allow Ghana, the world’s second-largest cocoa producer, to begin disbursing money to licensed buying companies (LBCs) to purchase cocoa from farmers.

Funding pressure delays purchases

Ghana’s new cocoa season opened on 25 September, but licensed buying companies had warned they would not purchase cocoa using their own funds while waiting months to be repaid by COCOBOD. This risked delaying purchases from farmers.

This week’s issuance is the first of three planned tranches of debt under COCOBOD’s 16.3bn cedis ($1.38bn) domestic financing programme. The second and third tranches are expected to be issued during the current season.

Alternative financing arrangements

COCOBOD has struggled to finance the sector since the collapse of its decades-old syndicated loan arrangement with international banks in the 2023/24 season.

A subsequent arrangement under which international traders financed cocoa purchases also broke down, contributing to payment delays for farmers last season.