The Acting CEO of Ghana Cocoa Board (Cocobod) has warned of the possible extinction of indigenous Licensed Buying Companies (LBCs).
According to Dr. Randy Anerley Abbey, the current cocoa financing model is choking local operators out of the market.
“Something is happening with the LBCs, especially the indigenous ones, which has to do with the fact that we are not doing the syndicated loan,” he revealed during an interview on Joy News’ PM Express Business Edition on Thursday.
He explained that Cocobod will not be seeking a syndicated loan for the 2025/2026 cocoa season, and while there’s uncertainty over the 2026/2027 season, the absence of the usual syndicated financing is already creating distress.
“We’re still doing the 60-40 with the buyers. So it’s the reason why I went to Europe and North America to meet the buyers and all that,” he said.
Under the syndicated loan arrangement, Cocobod typically creates a “seed fund”.
This money is disbursed to the LBCs to finance the purchase of cocoa beans from farmers. Without that facility, Dr. Abbey says, indigenous firms are stranded.
“But 2024/25, low syndicated loans, so no seed fund,” he said. “Now the indigenous LBCs are unable to operate because there’s no seed money.”
He acknowledged that while forgoing the syndicated loan may save Cocobod significant financing costs, it is having devastating consequences for local players.
[embedded content]“Mind you, because of where the prices are today, if we were to go for a syndicated loan, Cocobod will be looking at maybe GH¢3 billion or GH¢3.5 billion,” he noted.
“And because of the nature of our finances, you even have banks asking for 8% to 10% on $1.”
With financing conditions this harsh, Abbey said the local buying companies—most of which depend on Cocobod’s seed funding—have been left to struggle.
“One of the things we’ve done is to engage the central bank, and they asked for a follow-up letter. I’ve done that,” he said.
Dr. Abbey disclosed that during discussions with the Bank of Ghana, he proposed a practical and urgent intervention to avert collapse.
“What I then told the central bank when we engaged them was that, look, you have the Cash Reserve Ratio, where all the banks put 25% of their deposits at the central bank. This is idle, not doing anything.”
“Now we have a critical industry, the indigenous LBC dying off. Can we look at apportioning 2% or 3% of this Cash Reserve Ratio just to support indigenous LBCs?” he suggested.
He added that the funds could be ring-fenced specifically for cocoa purchases.
“We can restrict it to cocoa purchases, just to ensure that they also don’t go using it for oil, tin tomatoes and all those things.”
Dr. Abbey says he remains hopeful for a positive response from the central bank. But he also warns that time is running out.
“If we continue with this financing model, I fear that most of them might go extinct.”
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