Review cocoa funding model …LICOBAG appeals to govt

the licensed cocoa buyers association of ghana (LICOBAG) has suggested a hybrid of the current “80/20” funding model and the old model of securing some syndication facility to enable real-time payment for cocoa purchased and delivered to port by licensed buying companies (LBCs).

addressing journalists in accra on thursday on behalf of LICOBAG, the executive secretary, victus dzah, said secured funds for cocoa purchases must be ring-fenced and used as such, adding that, “a limited seed-fund regime should be operated to support LBCs to survive.”

according to LICOBAG, the 2025/2026 season adopted an 80/20 funding arrangement, but the situation worsened as many clients stopped buying cocoa by november after meeting contract targets or due to complaints about high ghana cocoa prices.

the LICOBAG urged the government to make effort to restore COCOBOD to its past glory by speeding up the new act on new pricing mechanisms, and pointed out the need for greater openness and stronger communication between LICOBAG and COCOBOD.

mr dzah appealed to the government, as a matter of urgency, to secure some facility to pay for an estimated 300,000 metric tonnes of cocoa in a phased-off manner between now and september to prevent the crisis from deepening.

according to the association, the industry risks collapse if urgent measures are not taken to address persistent funding challenges, weak sales strategies, and excessive political interference in the operations of the ghana cocoa board (COCOBOD).

LICOBAG identified funding constraints as the most critical problem, tracing the crisis to the 2023 and 2024 cocoa seasons when COCOBOD failed to secure the traditional syndicated loan facility used to finance cocoa purchases. instead of the usual annual facility of about $1.3 billion, COCOBOD managed to raise only $500 million, which was secured six months after the season had opened.

the association further explained that the shortfall compelled licensed buying companies (LBCs) to pre-finance cocoa purchases from farmers through commercial bank loans at high interest rates, then pegged at about 29.8 per cent. it said COCOBOD delayed payment for cocoa delivered to the ports for about six months, pushing several LBCs into huge debts and forcing some companies to collapse.

additionally, LICOBAG stated that during the 2024/2025 season, COCOBOD was unable to raise any syndicated facility, resulting in the introduction of a new 60/40 funding model which required off-takers to pre-finance 60 per cent of cocoa purchases through the bank of ghana, with the remaining 40 per cent paid upon final delivery.

while the model eased liquidity challenges temporarily, the association noted that it significantly weakened COCOBOD’s control over industry financing and left many LBCs without access to funding or buyers for their stocks. it said the model also contributed to delayed payments and increased cocoa smuggling.

the association also blamed COCOBOD and its marketing subsidiary, cocoa marketing company (CMC), for what it described as a flawed sales strategy.

on governance issues, LICOBAG criticised what it described as excessive political interference in COCOBOD, alleging that frequent changes in personnel with changes in government had weakened institutional memory, lowered staff morale, and undermined professionalism.

By Lawrence Vomafa-Akpalu

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