The Acting Chief Executive Officer of the Ghana Cocoa Board (COCOBOD), Dr. Randy Abbey, has expressed concern over the survival of indigenous Licensed Buying Companies (LBCs), warning that the current cocoa financing model may drive them out of business.
Speaking on PM Express Business Edition on Joy News, Dr. Abbey revealed that the absence of a syndicated loan for the 2025/2026 cocoa season is putting local operators under severe strain.
“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 stated.
COCOBOD traditionally secures syndicated loans to create a “seed fund” for LBCs, enabling them to purchase cocoa beans from farmers. However, for the 2024/2025 crop season, this arrangement was not pursued.
“But 2024/25, low syndicated loans, so no seed fund,” he explained. “Now the indigenous LBCs are unable to operate because there’s no seed money.”
Although skipping the loan facility may reduce Cocobod’s financing costs, Dr. Abbey noted the trade-off is proving detrimental to local firms. He added that the cost of borrowing on the international market has become too steep.
“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. And because of the nature of our finances, you even have banks asking for 8% to 10% on $1,” he disclosed.
To address the crisis, Dr. Abbey said he has engaged the Bank of Ghana and made a formal request for assistance.
“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.
He proposed that a portion of the Cash Reserve Ratio—25% of deposits held by commercial banks at the central bank—could be redirected to support indigenous LBCs.
“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,” he said. “Can we look at apportioning 2% or 3% of this just to support indigenous LBCs?”
Dr. Abbey recommended that any funds released should be strictly ring-fenced 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,” he said.
While he remains hopeful of a favourable response from the Bank of Ghana, Dr. Abbey cautioned that the window for intervention is closing.
“If we continue with this financing model, I fear that most of them might go extinct,” he warned.