The Ghana Cocoa Board (COCOBOD) is at an advanced stage of implementing a new locally financed funding regime that will enable the institution to raise working capital from domestic investors through a commercial paper programme. Pension funds, commercial banks, and key industry stakeholders have been identified as the primary sources of financing.
The Deputy Chief Executive Officer in charge of Finance and Administration at COCOBOD, Ato Boateng, says the institution has already engaged the necessary transaction advisors and is close to finalising the structure of the programme ahead of its launch.
Speaking in an interview on the sidelines of the Ghana-UK Investment Summit in London, he disclosed that significant progress has been made in designing the financing framework and addressing regulatory concerns raised by stakeholders.
“We’ve made significant progress and have hired all the advisors we need to launch the issuance. The advisors are working hard on the structure of the financing, which is almost finalised, to address all regulatory concerns raised by the relevant parties,” he said.
The proposed financing model forms part of broader efforts by the government to reform COCOBOD’s funding structure and reduce its dependence on traditional syndicated borrowing arrangements.
Under the new regime, COCOBOD intends to raise funds entirely within Ghana through the issuance of a commercial paper programme designed to support cocoa purchases during the crop season.
According to the Deputy Chief Executive, pension funds represent one of the most significant opportunities for the programme.
“The whole idea is for COCOBOD to raise funds internally, and we are looking at three different sources. The first source is pension funds,” he explained.
He noted that pension funds currently manage assets worth approximately GH¢100 billion and have the capacity, under existing investment regulations, to allocate a substantial portion of their portfolios to eligible investment instruments.
“Pension funds can invest up to about 35% of their assets. We could potentially tap into 35% of the 100 billion cedis,” he added.
Commercial banks will constitute the second pillar of the financing structure. While regulatory requirements remain a concern, COCOBOD says it is working on innovative arrangements to encourage stronger participation from the banking sector.
The institution plans to bring Development Finance Institutions (DFIs) into the structure to help expand the lending capacity of banks and improve the attractiveness of the programme.
“We need to be very innovative because we also want banks to actively participate. As such, we will look at bringing in Development Finance Institutions to expand the lending capacity of the banks,” he said.
The third source of financing will come from key players within the cocoa value chain. COCOBOD is considering private placements targeted at major industry stakeholders, including international buyers and other participants in the sector.
“We also want to bring in our industry stakeholders. As part of the issuance, we may consider private placements with some of our key stakeholders, especially buyers and other players in the industry, so that they also have a stake in what we are doing,” he stated.
The official stressed that the programme is being developed in close consultation with advisors and regulatory authorities to ensure a successful launch.
“It will be entirely locally financed. We are working very closely with advisors and regulatory authorities to ensure that Ghana is able to raise this funding locally through the issuance of commercial paper,” he said.
COCOBOD is proposing a 270-day commercial paper instrument, equivalent to roughly a nine-month maturity period, specifically tailored to the cocoa purchasing cycle.
The facility is expected to function as a working capital instrument that allows the institution to draw funds when required during the peak purchasing season and repay investors as cash flows are generated.
“What we are proposing is a 270-day commercial paper, meaning a nine-month maturity. It is essentially a working capital facility because our season runs from September through January, which is when we purchase about 70% of our produce,” he explained.
He added that the programme would adopt a tranche-based drawdown system to improve efficiency and minimise unnecessary borrowing costs.
“The idea is to structure the funding in tranches so that we draw only what we need for purchases. When the funds are no longer needed, we repay investors to ensure the money is used strictly for its intended purpose.”
The comments come after Finance Minister Dr. Cassiel Ato Forson revealed at the Ghana-UK Investment Summit that the government is preparing legislation to reform COCOBOD and establish a more sustainable financing structure for the cocoa regulator.
The Governor of the Bank of Ghana, Dr. Johnson Asiama, has also advocated for a model that enables COCOBOD to access long-term domestic capital, including pension funds, while reducing its dependence on conventional bank borrowing.
The financing reforms have taken on added significance amid ongoing public debate over developments in the cocoa sector, including concerns raised by farmers over producer prices and broader discussions about the future sustainability of Ghana’s cocoa industry.
