COCOBOD entered 2025 with GH¢17.8bn debt burden – Adongo

Introduction: A Stark Financial Revelation for Ghana’s Cocoa Board

In a stark disclosure that has sent ripples through Ghana’s agricultural and financial sectors, Isaac Adongo, the Chairman of Parliament’s Finance Committee, revealed that the Ghana Cocoa Board (COCOBOD) began the year 2025 grappling with a monumental debt burden. According to his statements, the entity entered the new year with approximately GH¢17.8 billion in loans alone, a figure that balloons when operational liabilities are included. Adongo, also the Member of Parliament for Bolgatanga Central, characterized the situation as one of critical “monetary misery,” warning that the scale of debt has rendered the cocoa sector’s primary financing vehicle unsustainable. This revelation, made during a press briefing on a cocoa branding initiative, transforms a long-standing concern into an urgent national crisis. The core question is no longer if COCOBOD’s financial model is broken, but how Ghana can restructure its most vital agricultural export chain to prevent systemic collapse. This article provides a comprehensive, SEO-optimized breakdown of the debt crisis, exploring its roots, analyzing its multi-layered impact, and outlining pragmatic steps toward a sustainable future for Ghana’s cocoa industry.

Key Points: Understanding the Scale of the COCOBOD Debt Crisis

To grasp the severity of the situation, it is essential to distill the key facts and assertions from the parliamentary report and expert analysis:

• Starting Debt Position (2025): COCOBOD began 2025 with about GH¢17.8 billion in formal loans.
• Total Financial Exposure: When adding operational liabilities (such as unpaid bills, accrued expenses, and other obligations), Adongo estimates the total “bleeding” exposure reaches a staggering GH¢60 billion.
• Sustainability Warning: The Chairman of the Finance Committee explicitly states this debt level is “unsustainable” and that “continued borrowing is imprudent” without addressing root causes.
• Metaphor for Mismanagement: Adongo uses the powerful analogy of a “leaking basket” to criticize the logic of acquiring more debt without fixing underlying inefficiencies in the cocoa value chain.
• Call for Reset: The clear prescription is a financial “reset” for COCOBOD, requiring the government to confront these liabilities directly rather than perpetuating the cycle.

Background: COCOBOD’s Role and the Genesis of the Debt Burden

The Mandate and Traditional Model of COCOBOD

Established to stabilize and develop Ghana’s cocoa industry, COCOBOD operates as a state-owned marketing board. Its traditional functions include:

• Pricing and Purchasing: Setting the farm-gate price for cocoa and purchasing all domestic cocoa exports.
• Quality Control: Ensuring beans meet international standards.
• Export Marketing: Selling Ghanaian cocoa on the global market.
• Farmer Support: Providing inputs, research through the Cocoa Research Institute of Ghana (CRIG), and sometimes credit.

Historically, COCOBOD’s operations were funded through revenues from cocoa sales. However, over the past two decades, its financial model has evolved, increasingly relying on domestic and external borrowing to finance operations, infrastructure projects, and farmer support programs, especially during periods of low global cocoa prices or delayed sales.

Historical Context: Ghana’s Debt Journey and COCOBOD’s Place

Ghana’s public debt has been a persistent macroeconomic challenge, leading to a series of IMF programs and a domestic debt restructuring in 2022-2023. COCOBOD’s debt is part of this broader narrative but is often categorized as “public enterprise debt” or “parastatal debt.” While not always included in the headline public debt figures, it represents a contingent liability for the state, given COCOBOD’s statutory monopoly and implicit government guarantee. The accumulation of this specific debt can be traced to several factors:

• Financing the Cocoa Roads Program: Massive infrastructure investments in cocoa-growing regions were often financed through COCOBOD borrowing.
• Payment of the Cocoa Producer Price: The fixed, often politically sensitive, farm-gate price must be paid upfront to farmers before export revenues are received, creating a cash flow gap that is frequently bridged by debt.
• Operational Inefficiencies: High administrative costs, losses in the domestic distribution chain, and alleged corruption have drained resources.
• Currency and Market Risks: Borrowing in foreign currency (for inputs or projects) exposes COCOBOD to exchange rate losses when the Cedi depreciates. Global cocoa price volatility also impacts revenue certainty.

Analysis: Deconstructing the GH¢60 Billion Exposure

The distinction between the GH¢17.8 billion in loans and the GH¢60 billion total exposure is critical. The larger figure likely encompasses:

• Accrued but Unpaid Liabilities: Interest on existing loans, unpaid bills to suppliers (e.g., fertilizer, insecticides), and unpaid allowances to staff.
• Contingent Liabilities: Guarantees issued by COCOBOD that may be called upon.
• Inter-company Balances: Debts owed to other state entities or vice versa.
• Overdue Payments to Farmers: In some seasons, there have been delays in paying farmers the full producer price, creating a backlog of obligations.

This structure reveals a vicious cycle: to pay current season farmers and fund operations, COCOBOD borrows. Interest and fees on that borrowing accumulate into the “operational liabilities” bucket, while the core loan remains. This erodes financial health without necessarily improving operational efficiency. The “leaking basket” metaphor Adongo used is apt: new revenue (water) from cocoa sales is lost (leaks) through debt servicing, operational waste, and inefficiencies before it can strengthen the system.

Legal and Governance Implications

While Adongo’s statements are political commentary, they point to potential breaches of the Public Financial Management Act, 2016 (Act 921) and the COCOBOD enabling legislation. State-owned enterprises are mandated to operate on a commercially viable basis and seek ministerial and parliamentary approval for significant borrowing. A debt burden of this magnitude, if unplanned and unapproved, raises questions about:

• Fiduciary Duty: The responsibility of the Board and management to ensure solvency.
• Parliamentary Oversight: Whether all borrowings were duly authorized and reported.
• Audit Queries: The likelihood of adverse audit findings from the Auditor-General regarding the management of COCOBOD’s finances.

However, specific legal actions depend on the findings of formal audits and investigations, which have not been publicly detailed as of this analysis.

Practical Advice: Pathways to a Sustainable Cocoa Sector

Addressing this crisis requires a multi-pronged, disciplined approach. Merely injecting more funds or restructuring debt without reform will guarantee recurrence.

1. Comprehensive Financial Audit and Debt Restructuring

The first step is a full, independent forensic audit of COCOBOD’s books to validate the exact nature and origin of the GH¢60 million liability. With this clarity, the government, as the ultimate guarantor, must initiate a debt restructuring plan. This could involve:

• Negotiating with domestic lenders (banks, pension funds) for extended maturities or interest rate adjustments.
• Seeking concessions from external creditors, potentially with IMF/World Bank facilitation.
• Converting some debt into long-term, low-interest “cocoa sector development bonds” tied to specific reforms.

2. Operational and Structural Reforms

Debt relief is futile without fixing the “leaks.” Key reforms include:

• Transparent Pricing Mechanism: Decoupling the producer price from political expediency and linking it more closely to international prices and production costs, perhaps with a stabilization fund.
• Supply Chain Efficiency: Digitizing the purchasing and payment system to reduce theft, delays, and administrative bloat. Implementing traceability systems to reduce quality-related revenue losses.
• Divestment of Non-Core Assets: Selling off non-essential real estate or subsidiaries to raise cash for debt repayment.
• Performance-Based Management: Overhauling the board and senior management with clear, measurable financial and operational KPIs tied to debt reduction and efficiency gains.

3. Strategic Refocusing of COCOBOD’s Mandate

A long-term solution may require redefining COCOBOD’s role:

• Potentially separating the regulatory/policy functions from the commercial marketing function.
• Exploring options for licensed private buyers alongside COCOBOD to introduce competition, improve efficiency, and reduce the central entity’s direct borrowing needs (while maintaining a strong regulatory framework to protect farmers).
• Focusing COCOBOD purely on export marketing and quality assurance, with farmer support programs transferred to the Ministry of Food and Agriculture or a dedicated agency with clear, budgeted funding.

FAQ: Frequent Questions on the COCOBOD Debt Crisis

Is COCOBOD bankrupt?

Technically, “bankruptcy” is a legal term for private companies. COCOBOD, as a state-owned enterprise with a monopoly, does not face liquidation. However, it is functionally insolvent—its liabilities far exceed its liquid assets, and it cannot meet its obligations as they come due without government bailouts. The situation is one of severe financial distress.

Will this debt be added to Ghana’s national public debt?

It is already a contingent liability of the state. If COCOBOD defaults, the government, to prevent a collapse of the cocoa sector (which contributes about 30% of foreign exchange earnings), would almost certainly have to assume the debt. Therefore, it is effectively part of Ghana’s debt ecosystem, even if not formally on the central government’s balance sheet yet. A formal assumption would increase headline public debt metrics.

How does this affect cocoa farmers?

Directly and severely. The debt crisis threatens:

• Delayed Payments: Cash flow problems can lead to delays in paying farmers the fixed producer price, devastating household incomes.
• Reduced Investment: No funds for inputs (fertilizer, pesticides) or extension services, lowering yields and incomes.
• Program Cuts: Elimination of social programs like free cocoa pod husk processing or health insurance schemes for farmers.
• Long-Term Viability: A collapsed COCOBOD would throw the entire domestic purchasing and export system into chaos.

What is the government’s likely response?

Historically, the response has been ad-hoc: providing emergency bailout funds, restructuring existing debt, and possibly seeking IMF support with conditions tied to SOE reform. A credible, long-term solution will require the political will to implement the deep reforms outlined above, which may be painful in the short term (e.g., adjusting the producer price mechanism) but essential for sustainability.

Conclusion: The Imperative for Immediate and Decisive Action

The disclosure that COCOBOD entered 2025 with a GH¢17.8 billion loan book and a GH¢60 billion total financial exposure is not merely a statistic; it is a diagnosis of a system in critical condition. Isaac Adongo’s “leaking basket” metaphor perfectly captures the futility of perpetuating a cycle of borrowing to cover inefficiencies and mounting liabilities. The cocoa sector debt crisis is now a macroeconomic threat, a development challenge, and a direct risk to hundreds of thousands of Ghanaian farmers.

The path forward is clear, though politically difficult. It begins with radical transparency through a full audit, followed by a credible debt restructuring that provides breathing room. This must be immediately coupled with uncompromising operational reforms to plug the leaks—digitizing processes, rationalizing costs, and depoliticizing pricing. Ultimately, a strategic rethink of COCOBOD’s mandate may be necessary to separate its commercial risks from its regulatory duties. The time for half-measures and political deflection is over. The sustainability of Ghana’s “golden pod” and the economic well-being of its core agricultural regions depend on confronting this GH¢60 billion reality head-on. The government’s response will be a definitive test of its commitment to long-term economic stewardship over short-term political convenience.

Sources

• Adongo, I. (2025, February). Press Briefing on Cocoa Branding Initiative [Parliamentary Statement]. Accra, Ghana.
• Ghana Cocoa Board (COCOBOD). (2024). Annual Report and Financial Statements.
• Ministry of Finance, Ghana. (2024). Public Debt Management Report.
• Bank of Ghana. (2025). Summary of Economic and Financial Data: Cocoa Sector Indicators.
• International Monetary Fund (IMF). (2024). Ghana: Staff Report for the 2024 Article IV Consultation and Review Under the Extended Fund Facility.
• Ghana Audit Service. (2023). Report on the Public Accounts of Ghana: COCOBOD Accounts.